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Daily Tax Report: International

EU Relaxes Rules More on Handouts for Virus Tax Relief (1)

March 20, 2020, 12:39 PMUpdated: March 20, 2020, 3:34 PM

The EU has upped the limit for how much member states can give in direct financial aid—including forgoing taxes—to help companies hit by the new coronavirus outbreak.

The EU had announced on March 17 that it would relax rules limiting government handouts to businesses, freeing up member nations to give as much as 500,000 euros ($537,000) of aid per company.

The final version of the new rules adopted by the EU, announced Friday, increased this limit to 800,000 euros per company as the crisis deepens.

“The economic impact of the Covid-19 outbreak is enormous. We must act quickly to control the consequences as much as possible. And we must act in a coordinated manner. This new temporary framework allows Member States to make full use of the flexibility provided for by state-aid rules to support the economy in these difficult times,” Margrethe Vestager, executive vice-president for competition policy at the European Commission said Friday.

Countries like France, Italy, and Germany have adopted multi-billion-euro aid packages, including waiving tax bills, removing penalty regimes, and allowing companies to pay later.

Germany Tax Aid

Germany said it would allow companies to defer taxes until Dec. 31 2020, following similar moves by Italy, France, and Spain.

While there are no strict requirements for approval of the deferral, businesses must demonstrate that they are directly affected.

The government also announced Thursday that for taxpayers who are required to make advance payments of tax, they will be allowed to make adjustments to their prepayments based on their expected lower income for the coming year.

The government also said it would suspend enforcement of overdue tax debts. The tax office will also waive default surcharges that are legally incurred during this period. This applies to income tax, corporate income tax, and sales tax.

(Updates with Germany announcement. )

To contact the reporter on this story: Hamza Ali in London at hali@bloombergtax.com

To contact the editors responsible for this story: Meg Shreve at mshreve@bloombergtax.com; Rachael Daigle at rdaigle@bloombergtax.com

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