28 April 2020
The German Ministry of Finance has announced new refund measures to assist companies facing liquidity issues due to COVID-19. This includes that for companies that are expecting a loss in 2020, they may receive a refund of tax amounts paid for 2019 in addition to tax amounts already paid for 2020.
With the refund measures, affected taxpayers can apply for a reduction of advance payments for income or corporate tax for 2019 on the basis of a flat-rate loss carryback. Taxpayers are generally considered affected if the advance payments for 2020 have already been reduced to zero.
The flat-rate loss carryback from 2020 is equal to 15% of the relevant income that was used to determine the advance payments for 2019, subject to a maximum of EUR 1 million or EUR 2 million in the case of a joint assessment. On this basis, the advance payments for 2019 are recalculated and resulting overpayments are refunded.
In the event that a company recovers and, contrary to expectations, it does make a profit in 2020, the refund will need to be repaid.
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