Germany: Tax relief measures in legislation (COVID-19)

Germany: Tax relief measures in legislation (COVID-19)

The Bundestag and Bundesrat on 29 June 2020 passed legislation to provide tax relief in response to the coronavirus (COVID-19) pandemic.


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Among the tax relief measures included in the legislation are the following:

  • A six-month reduction of the rates of value added tax (VAT), from 19% to 16% and from 7% to 5%
  • An increased threshold for 2020 and 2021 for tax loss carrybacks (for income tax and corporate income tax purposes) to €5 million (or €10 million for joint assessments), and the ability to apply the increased loss carryback for 2020 to adjust pre-payments for the assessment period 2019
  • Availability of the declining-balance method of depreciation for assets acquired or produced in 2020 and 2021
  • Extension by one year for periods in which to make tax privileged re-investments
  • Increased allowance for trade tax add-backs
  • Increased rate of eligible expenses for the research tax incentive

Read a July 2020 report [PDF 332 KB] prepared by the KPMG member firm in Germany

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