- The Third Temporary Aid Programme and the Third Temporary Aid Programme Plus
- Fresh Start Assistance (Neustarthilfe) and Fresh Start Assistance Plus
- KfW programmes
- Economic Stabilisation Fund
- Tax-related assistance
- Basic income support
- Compensation for short-time work
- Special fund for cultural events
The Third Temporary Aid Programme and the Third Temporary Aid Programme Plus
Companies and self-employed individuals can claim subsidies for their fixed costs. The Third Temporary Aid Programme applies to the period from November 2020 to June 2021, while the Third Temporary Aid Programme Plus applies to the period from July until December 2021. To be eligible, applicants must prove that turnover has shrunk by over 30%. Equity injections are available for cases where turnover has declined even more sharply.
Applications may only be submitted via professional third parties such as tax advisers, lawyers, and accountants and auditors. The responsibility for processing applications and disbursements lies with the Länder.
Fresh Start Assistance (Neustarthilfe) and Fresh Start Assistance Plus
The Fresh Start Assistance scheme provides help regardless of fixed costs, thus giving tailor-made support to self-employed individuals who do not have fixed costs such as office rents and leasing costs and therefore cannot benefit from the Temporary Aid Programme. For the period from January to June 2021, the Fresh Start Assistance scheme provides for support of €1,250 a month; for the period from July to December 2021, the Fresh Start Assistance Plus scheme provides for support of €1,500 a month. This means that, for the entire support period, pandemic-hit self-employed individuals can access a total of up to €16,500 under the Fresh Start Assistance scheme, allowing them to hit the ground running after the worst of the crisis.
Companies, self-employed individuals and freelancers who need a loan because they are in financial difficulties due to the Covid-19 pandemic can access targeted offers provided by KfW in its special loan programme, which includes the KfW Instant Loans. Start-ups and small enterprises in need of capital during the pandemic are also eligible for support in the form of federally funded KfW equity financing.
For further information on the KfW special loan programme, please visit www.kfw.de/inlandsfoerderung/Companies/KfW-Corona-Hilfe/ and (in German) www.kfw.de/s/deiBE2oA.
Economic Stabilisation Fund
The Economic Stabilisation Fund (ESF) offers companies stabilising measures to strengthen their capital base and to help them overcome cash flow shortages. These measures are available to all sectors of the economy. The ESF is targeted towards companies in the real economy whose insolvency would have a significant adverse impact on the German economy or labour market. The ESF encompasses a total volume of €600bn.
The ESF’s stabilisation instruments are:
- Federal guarantees on loans, including credit lines, and capital market products (borrowed capital)
- Recapitalisation measures as a direct means of strengthening equity
As part of the counter-guarantee programmes offered by both the federal government and by the Länder, small and medium-sized enterprises (SMEs) can, together with their main banks, access guarantee instruments when they need to borrow money or secure additional funds with the silent participation of SME venture capital companies (Mittelständische Beteiligungsgesellschaften). The German government has also expanded funding options under the corona assistance programmes to help businesses that have run into difficulties through no fault of their own. Measures enabling this have included increasing the guarantee cap and investments to be covered from €1.25m to €2.5m, increasing the risk covered by the federal government and various steps to accelerate the decision-making process. The expanded funding options apply until 31 December 2021.
A broad range of tax-related measures and simplifications apply to employees and companies during the Covid-19 pandemic. They include, for example:
- Tax payment deferrals,
- The simplified adjustment of tax prepayments,
- Extended deadlines for filing tax returns,
- Accelerated depreciation options for movable assets,
- Tax-free employer top-ups for short-time work benefits,
- A reduced VAT rate for food served in the restaurant and catering sector until 31 December 2022,
- A tax allowance for working from home, and
- A permanent increase of the tax allowance for single parents.
Basic income support
The requirements for accessing basic social security systems have been eased until 31 December 2021. This provides a safety net in particular for self-employed individuals and low-income employees who have suddenly run into financial difficulties.
Compensation for short-time work
The easing of requirements for accessing short-time work compensation means that 100% of social security contributions are covered until 31 December 2021. To register for the short-time work scheme, the special provision currently in place requires that at least 10% – rather than the usual 30% – of employees must be affected.
Special fund for cultural events
The German government has launched a special fund of €2.5bn that is designed to allow a broad range of cultural events to start up once again. This allows for financial support for events taking place under restricted conditions due to hygiene protocols on the one hand and, on the other, provides a safety net in case events have to be cancelled after all. The purpose of these targeted assistance payments is to make cultural events of all sizes possible again after such a long hiatus.