Companies should take appropriate measures immediately to inform and support their employees, customers and other stakeholders. Packages of tax and legal measures are currently being passed at the national and international level. What does this mean for you company? We support you in this matter and in dealing with the financial consequences of Covid-19 along the entire value chain – with relevant emergency measures.
Current legal questions and answers at a glance
Do you need a legal assessment on questions relating to Covid-19?
We provide you with the most common scenarios with the relevant legal questions and our legal assessment, and update our information daily to support you in this time as best we can. Please note that our assessment relates only to German law.
Mayday Accounting: Expert support with Covid-19 bottlenecks in your finance department
The spread of the virus is leading to acute resource bottlenecks in many companies' finance departments. Such shortages can place a massive strain on employees.
Potential effects include:
- Rapid growth in transactions varying from sector to sector
- Decline in performance due to disrupted processes in accounting
- Reduced performance of IT infrastructure and ERP
- Team members falling ill
The objective consequences of these restrictions in finance could be severe, both internally and externally, and may threaten a company's ability to remain a going concern.
Mayday Accounting can assist you – our qualified accounting experts will take on upcoming tasks at short notice. They will reduce your burden, increase employee satisfaction and potentially even help ensure the survival of your suppliers. Our experts can be deployed quickly and with minimal strain on your internal resources.
Reducing tax payments – get short-term liquidity relief
In such an interconnected global economy, the effects of Covid-19 are felt by companies all over the world and are causing multiple liquidity bottlenecks.
Taxes payable according to tax assessments stipulating fixed deadlines can put additional strain on liquidity. Only in exceptional cases can tax payments be deferred (interest-free). If tax is not paid by the deadline, late payment penalties are also imposed. The burden of tax payments could make it difficult to make repayments to other creditors.
By taking advantage of opportunities to reduce your short-term tax burden, you can improve your liquidity, at least for a certain period.
- Reducing tax prepayments
This would be based on early tax assessments for the 2020 fiscal year. The German Federal Ministry of Finance [BMF] assists with easy adjustment of prepayments.
- Deferring tax payments
The BMF has signalled that it won't place strict requirements on deferral requests, thereby supporting companies' liquidity situation.
- Reducing VAT
Lowering the basis of assessment for doubtful receivables expected to be uncollectible (specific allowances)
- Managing withholding tax
Determining withholding tax amounts and assessing any tax exemptions; making requests for exemption or reduction of withholding taxes
- Deferring social security contributions
The collecting agency (health insurer) can defer claims for the total social security contribution.
- Reducing special prepayments
Requests to reduce special prepayments might have good chances of being accepted.
- Managing the date of submitting advance returns
Depending on whether the client is in a tax payable or tax refund position, they could apply for or withdraw permanent deadline extensions or adjust the advance return period.
- Bringing forward the date of input VAT deduction
Through short-term streamlining of internal approvals and processing related to incoming invoices (e.g. eInvoicing), input tax can be claimed more quickly and thus outflows can be reduced or inflows received earlier.
- Delaying date that VAT arises
By arranging for services to be accepted later, VAT can arise later too. Combined with an agreement on advance payments, with VAT arising only on the date of collection, cash flow can be managed and optimised.
- Suspended refunds
The burden can also be reduced by requesting payment of refund claims in the assessment procedure that have been withheld by the tax authorities pending queries.
- Develop tax-efficient solutions for companies in strategic, operating and financial difficulties, as well as for their stakeholders
- Identify potential solutions to improve a company's liquidity in the short, medium and long term
- 'Quick-Scan' to identify tax saving and liquidity potential
We are here to respond to your questions – contact us.
Corporate governance during the coronavirus crisis
In a short space of time, the coronavirus pandemic has presented companies with new risks that require unprecedented measures. Intelligent management and monitoring systems provide good opportunities to respond to the changes.
We have compiled answers to the most urgent questions on effective corporate governance in the current situation.
You can find out how an effective crisis management system should be set up so that your company can be managed securely in this situation.
In addition, we tell you which governance systems are especially important and useful now and what the coronavirus crisis could mean in terms of realigning processes, workflows and practices.
If you have specific questions or need help to implement measures needed in the short and medium term, you can contact our Corporate Governance Hotline: 0800 SOS KPMG (0800 767 5764)/email: email@example.com at any time and consult with our experts. We are here for you around the clock.
Banks and Sparkassen: processing loan applications faster through process automation
The spread of the coronavirus is have a profound effect on the global economy. In this situation, the banks and Sparkassen [German savings banks] bear a significant responsibility for the credit industry and the companies affected.
We are currently supporting Sparkassen and banks to set up processes and calculation aids. This will allow loan applications relating to the planned state aid programme to be processed automatically and designed as efficiently as possible. In addition, Sparkassen can get assistance with the loan application process from our experts, who have the necessary expertise in matters of law and business administration.
Examples of KPMG support services:
- Data entry for the application
- Performance of debt service audit and liquidity planning
- Process management
- Operational support
- Evaluation of the effects of the coronavirus crisis on bank management
Covid-19: Impact of the pandemic on healthcare providers
Healthcare currently faces major challenges from the coronavirus pandemic, placing a heavy burden on processes, particularly in hospitals. More and more intensive care capacities are needed and the demand for PPE and hygiene products has risen sharply. This requires quick and pragmatic solutions in procurement and materials management.
The current situation also increases the risk of insolvency and excessive debt for hospitals. Adequate liquidity management combined with immediate measures is indispensable in this situation.
Professional assistance during difficult times
We will provide you with quick assistance during these times of crisis – physically on location or remotely via digital channels.
We will provide immediate assistance on urgent issues such as
- operational processes, procurement/materials management and logistics as well as
- liquidity and financial aid
Our experts will also provide advice and assistance with creating management and control platforms (dashboards), the development of data models and scenario analysis as well as professional project and crisis management.
Tax measures during the coronavirus crisis
The coronavirus crisis presents many companies with major challenges. There is new information every day. The German federal government as well as individual states and also international regulators adopt new measures all the time to keep the global economy going during these challenging times. Many of these measures also have tax implications. These pages will provide you with a continuously updated overview of the current national and international decisions. They also provide the relevant links to take you directly to the official information made available by the federal government and states.
Assistance with applying for government financial aid during the Covid-19 crisis (including KfW application procedure 037/047)
The Covid-19 crisis leads to slumps in revenue and interruptions of supply chains with unchanged fixed costs and thus risks with regard to ensuring solvency. Those in charge of making decisions in companies must be ready for a change in situation on the spot, assess the effects of the crisis and quickly identify courses of action for continuing operations and ensuring liquidity. The German federal government/ Development Bank (KfW) and federal states have adopted an extensive aid package for companies. The various application procedures and documentation required for receiving government grants present companies with major challenges as well as unknown decision-making processes in some cases. Uniform and clear standards for documentation as well as quick results and reliability with regard to transparency and resilience of data are rewarded in the processing of applications and may have an accelerating effect.
We will assist you throughout the entire application process – from application to payout of government aid (loans) – by taking your current financing into consideration:
- Examination of the requirements for application in each case for claiming government financial aid, e.g.
- assessing potential crisis scenarios as at 31 December 2019 (not a "firm in difficulty") and other criteria under EU state aid law
- validating/preparing business and liquidity plans as a basis for determining capital requirements and the eligibility for government aid
- reviewing and negotiating amendments and expansions of existing financing (covenants, waivers, debt servicing capacity for expanded financing, apportionment of liability to the creditors determined)
- Provision of a digital financial aid assistant to determine the federal and state aid programmes that might be considered
- Advice and coordination of application for government financial aid and the required documentation by taking into account any grants already received
- Support with negotiations with your principal bank and possibly also KfW and existing financing partners
- Development of internal/external communication strategies and stakeholder management