German Cabinet Proposes Tax Help Package for Easing Lockdown

German communes and companies would get additional support under a draft coronavirus tax relief measure approved by the government on Tuesday.

The Parliament is expected to consider the draft measure in the coming weeks.

• Municipalities would be given two more years, until Dec. 31 2022, to comply with the country’s new sales tax laws, according to the measure.
• Provisions in the conversion tax law would be simplified. For example, when a company legally changes its form the retroactive tax period would be extended from eight to 12 months.
• Short-term work benefit subsidies provided to help compensate for lost wages from March to December 2020 will be tax exempt up to 80% of the difference between the target remuneration and the actual remuneration.
• Value-added tax on food served by restaurants and catering services would be reduced to 7% from 19% after June 30 and before July 1, 2021.

Check out Bloomberg Tax’s country-by-country roadmaps covering direct and indirect tax developments.