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A stimulus package for everyone in Germany

The Covid-19 pandemic is one of the greatest challenges in the history of the Federal Republic of Germany – primarily as a health issue, but also as an economic challenge. The German government is tackling this historic task head on with an unprecedented economic stimulus package: Measures to deploy a total of €130bn come as a big ‘ka-boom’ that are providing a powerful impetus to stabilise the economy. At the same time, these measures also include investments in the future to ensure that we emerge from the crisis stronger than before.

Everyone in Germany will benefit. Here is all the information on how this benefits you – and on how we can all quickly get back on track. Together.

Olaf Scholz “This provides help especially  to the self-employed working in the cultural and events sector, who have been particularly hard hit by the restrictions.”

The German government’s coronavirus assistance programmes are adjusted and expanded on an ongoing basis. For example, the circle of those eligible for the November Assistance Programme has been expanded to provide effective, swift assistance to as many of those affected by the current partial lockdown as possible. The existing temporary aid programme will be extended and expanded until June 2021. In particular, Temporary Aid Programme III, which is new, provides for significant improvements for self-employed individuals and the cultural and events sector, which has been particularly hard hit.

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Citizens Support for everyone who needs it

We are all everyday citizens, employees, consumers, mothers or fathers. It follows that the stimulus package addresses a range of different aspects in our lives. It is helping families, and society as a whole, to get through the crisis as well as opening up horizons for each and every one of us. Click below to read more on the various measures:

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  • Graphic: How the stimulus package supports families BildVergroessern

    Three things you can take action on now:

    The stimulus package provides support for families during the Covid-19 pandemic. To benefit from the support offered, there are a few things you can do now:

    1. Take a look at your bank account: For September and October, a one-time €300 bonus payment for families with children was disbursed.
    2. Take advantage of tax assistance: Tax relief for single parents has been increased to €4,008.
    3. Apply for a child supplement: Families can receive a monthly payment of up to €185 per child.

    Click here [pdf, 45KB] to download more information on the support available to families.

    One-off bonus payment for families with children: on your account in no time, and a sign of appreciation

    The social distancing rules and lockdown were particularly trying for families as they were forced to grapple with daycare and school closures at the same time as work obligations. Many families lost money over this. For this reason, the German government is providing special support to families and single parents. They are receiving a one-off bonus payment of €300 per child. The bonus is disbursed together with child benefit payments. A sign of appreciation for parents, the bonus payment for families with children also contributes to social equity as the bonus will not be offset against basic income support for jobseekers (Grundsicherung). However, in the case of households with higher incomes, the bonus will be offset against the tax allowance for children (Kinderfreibetrag).


    Extension of care support benefit and benefits for parents with sick children

    Members of the statutory health insurance scheme can claim benefits when they cannot go to work because their child is sick. However, considering the fallout from the Covid-19 pandemic, the existing provisions may not always be sufficient. For this reason, couples with children can claim another five days of sickness benefit if a child is ill; single parents can claim another ten days.

    Anyone needing to care for relatives or change care arrangements due to Covid-19 can benefit from emergency care assistance until 31 December 2020. This allows those caring for a relative to claim up to 20 working days of leave this year. The care support benefit can also be claimed for up to 20 working days if care must be provided at home due to pandemic-related shortages in the care sector.

    More all-day childcare and digital schools: an investment in the future

    Germany wants to improve its system of all-day childcare for toddlers and school-age children. To expedite the process, the German government is using its stimulus package to accelerate its investment offensive to create more all-day schools and all-day childcare. At the same time, the crisis has shown that digital technology and online teaching are now part and parcel of everyday life at the modern school. Schools, then, need to be enabled to combine in-person teaching at school with online teaching at home. To this end, the existing Digital Pact for Schools is going to be extended and investments in state-of-the-art schools increased.

    More childcare facilities mean more opportunities for all families

    The stimulus package is improving the daycare system for the little ones and the very tiny ones, too: It is upping capacities in the area of childcare by allocating another billion euros for new buildings, conversions and expansions that will provide more kindergartens, childcare facilities and crèches. This applies to measures that will be implemented in 2020 and 2021. This extra supply of childcare facilities gives families and single parents more options and thus improves their career prospects.

  • Graphic Tax allowance: A financial boost for single parents BildVergroessern

    A financial boost for single parents

    Single parents are receiving targeted support in the form of increased relief on income tax. Click here [pdf, 41KB] to download the five most important facts on this.

    The pandemic is a particularly difficult time for single parents, who have to devote more time and energy to childcare. This often comes with financial losses. To support single parents in this situation and ensure their children have a financially stable home, the German government is increasing the annual amount of tax relief from €1,908 to €4,000. This means that single parent households can now claim more than twice the amount of annual tax relief. Applicable in 2020 and 2021, this increase gives single parents a noticeable financial boost: For example, a single parent with two children and an annual gross income of €40,000 thus will have an extra €600 annually in their pocket.

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    How are you, Germany? Episode 2: The single mother
    When the Covid-19 pandemic started, single mother Yasemin Arpaci was caught unawares. She and her son were initially forced to manage the burden all on their own. In the video, she tells the story of how the two of them coped and what support they had.

  • The VAT reduction: a boost for consumers and retail

    To boost consumer demand in Germany, the German government introduced a temporary VAT reduction between 1 July 2020 and 31 December 2020: This has lowered standard VAT from 19% to 16%, and cut reduced VAT, which applies to items such as groceries, from 7% to 5%. This boosts people’s spending power and benefits lower-income earners especially. At the same time, companies benefit from an uptick in demand for their products.

    An affordable energy transition for everyone: lowering the electricity surcharge

    All electricity consumers in Germany pay a surcharge known as the “EEG surcharge” to promote more sustainable energy use and generation. However, due to the economy shrinking as a result of the pandemic, wholesale electricity prices have fallen and the surcharge risks increasing sharply in 2021. To ensure electricity remains affordable for everyone, the federal government will provide a grant to reduce the surcharge levied on electricity consumers to 6.5 cents/kWh in 2021 and to 6.0 cents/kWh in 2022. This measure serves as a counterweight to the potential increase and will help stabilise electricity prices.

    Easier access to basic income support: safeguarding standards of living

    A lot of people have been left in financial straits by the pandemic and through no fault of their own. For this reason, the German government has made it easier to access basic income support. This means that people can support themselves and pay for housing, even if they have lost income. Applicants need not disclose their financial circumstances for a six-month period nor dip into their savings. To speed up payment, applications are approved on a provisional basis and means-testing will be conducted at a later point in time. The stimulus package has extended this measure until 31 December 2020.

    For information on further stimulus measures, please go to the “Local authorities” section.

  • A simplified regime for the short-time work scheme to safeguard jobs

    Graphic: Short-time work benefit extended BildVergroessern

    Because of the pandemic, many companies in Germany have seen a sharp decline in business, with some sectors recording no income at all for certain periods of time. As early as March, the German government introduced a simplified regime for accessing short-time work benefits to safeguard jobs. For companies that introduce short-time work by 31 December 2020, the eligibility period for short-time work benefit has been extended to a maximum of 24 months (and until 31 December 2021 at the latest).

    The stimulus package has also allowed for an increase in short-time work benefits: Depending on the duration of short-time work, the Federal Employment Agency covers 60–80% of lost wages; for parents, 67–87% of lost wages are covered. These increases apply until 31 December 2021 for all employees who became eligible for short-time work benefits by 31 March 2021.

    Stabilising social security contributions: avoiding net losses

    The Covid-19 pandemic is pushing up social security spending. To prevent a resulting increase in social security contributions, which would mean a heavier burden on employees and companies, the stimulus package provides for a guaranteed cap on social security contributions: It limits social security contributions to a maximum of 40% at least until the end of 2021. Any additional funds required to finance the social security schemes above this cap will be taken from the federal budget.

    Safeguarding apprenticeship places: training the skilled workers of tomorrow

    The pandemic must not jeopardise apprentices’ training. This would go against the interests of Germany, where we urgently need skilled workers. The stimulus package puts in place the conditions that school leavers need to start their apprenticeships or that those already in an apprenticeship require to be able to complete their training properly. For example, small and medium-sized enterprises which do not reduce the number of apprenticeships offered in 2020 compared to the three preceding years will receive a one-off premium of €2,000 for each new apprenticeship contract they conclude.

    For information on further stimulus measures in this area, please go to the “Safeguarding jobs and apprenticeships” section.

Companies creating room for manoeuvre

The pandemic has dealt a heavy blow to companies in Germany. From self-employed artists to micro-companies in retail to medium-sized manufacturing companies – almost all of them are suffering from revenue losses and uncertainty on a number of fronts. Many are struggling to survive. That is why the stimulus package provides extensive assistance to help everyone navigate their way out of the crisis. Click below to read more on the various measures:

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  • Short-term aid: holding out despite high pandemic-related revenue losses

    Some sectors continue to be severely affected by pandemic-related restrictions, so much so that even originally healthy companies need immediate support. This applies, for example, to many event logistics companies, the fairground and amusement sector, nightclubs and travel agencies, some of which are affected by new or prolonged closures. For these sectors, short-term aid has been available since June 2020; it was initially extended until 31 December 2020 and is now to be continued in an expanded form in 2021, too. Some €25 billion in grants are currently available for this purpose, and will not have to be repaid. The stimulus package thereby creates options for the companies, non-profit organisations and self-employed individuals who have been hit the hardest by the pandemic.

    Who gets how much?

    Companies can apply for the new short-term aid for the months of September to December 2020. They will benefit from simplified conditions of access and higher rates:

    Revenue loss (in the month for which the aid is granted, compared with the same month last year):

    • Between 30% and less than 50% (previously minimum 40%): 40% of eligible fixed costs will be covered by short-term aid
    • Between 50% and 70%: 60% of eligible fixed costs will be covered by short-term aid (previously 50%)
    • Over 70%: 90% of eligible fixed costs will be covered by short-term aid (previously 80%)

    Graphic: Current Coronavirus: Assistance programmes at a glance BildVergroessern

    Extraordinary economic assistance: very swift assistance during closures

    Some sectors were affected by the targeted four-week partial lockdown which began on 2 November 2020 and which was introduced as a “circuit-breaker” designed to contain the spread of the virus. Despite government aid, many of the companies, self-employed individuals, associations and institutions affected by the social distancing rules imposed in spring 2020 have been left in an economically weakened position. This is why the federal government is providing support to them swiftly and with minimal red tape by granting them extraordinary economic assistance during the temporary closures. For November 2020, the companies affected are eligible for a one-off lump-sum payment of up to 75% of the revenue they generated in November 2019. A total of up to €10 billion is available for this purpose.

    Extended tax loss carryback: staying solvent despite revenue losses

    To better cushion revenue losses and shortfalls caused by periods of full or partial lockdown, the economic stimulus package is expanding loss carrybacks for two years. This gives lockdown-hit companies greater scope to offset current losses against earlier profits for tax purposes. For 2020 and 2021, the maximum basic amount will be upped to €5 million or, in the case of a joint assessment, to €10 million. Furthermore, taxpayers will now also have the option of applying the carry-back to their 2019 tax return, for example by setting up a coronavirus tax reserve. This allows for the creation of a financial cushion and ensures that companies remain solvent.

    Reduction of the electricity surcharge: making the energy transition affordable for everyone

    For many small and medium-sized companies especially, stable electricity prices increase competitiveness. However, due to the economy shrinking as a result of the pandemic, wholesale electricity prices have fallen. As a result, the electricity surcharge is likely to increase sharply in 2021. This surcharge is how we all help finance the energy transition. To keep electricity prices as low as possible, the federal government will be subsidising a reduction of the surcharge on electricity consumers: it will be 6.5 ct/kwh in 2021, and 6.0 ct/kwh in 2022. This gives energy-intensive sectors in particular a more reliable basis for planning and thus ensures that companies remain competitive. This is something that benefits all of us.

    Stabilising social security contributions: no increase in personnel costs

    The Covid-19 pandemic is driving up spending in all social security schemes. To protect companies against incalculable increases in non-wage labour costs, the stimulus package provides for a guaranteed cap on social security contributions: It limits social security contributions to a maximum of 40% at least until the end of 2021. Any additional funds required to finance the social security schemes beyond this cap will be taken from the federal budget. This gives entrepreneurs in all sectors the robust figures they need to plan ahead and protects ordinary Germans’ net incomes.

    Financial assistance to mitigate the fallout from the pandemic
    Since the beginning of the pandemic, the German Finance Ministry has been providing assistance packages worth billions to support companies directly – this includes microenterprises, self-employed individuals, freelancers, small and medium-sized enterprises, employees and large companies. Grants for small businesses, the self-employed and freelancers as well as an economic stabilisation fund for larger companies and KfW loans are supporting jobs and the economy.

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    How are you, Germany? Episode 4: The event managers
    The Covid-19 pandemic came as a real blow to the events sector. When all events were cancelled, Nadine Bortscheller and Ann-Kathrin Schmidt at first lost sleep over the situation. In the video, the two women explain why burying their heads in the sand was not an option, and what they want future policy to look like.

  • Improved depreciation options: creating investment advantages

    Many companies have to invest now to adapt to changed conditions and remain viable in the future. To boost investment and create additional investment incentives, companies will enjoy improved depreciation options for movable assets such as machinery for the tax years 2020 and 2021. These accelerated depreciation options allow companies to immediately deduct a larger share of investment expenditure from their taxable income. This is particularly interesting when it comes to digital assets. In addition, special depreciation options can be claimed if certain conditions are fulfilled (according to section 7g of the Income Tax Act).

    Deferred payment of import VAT: protecting liquidity and competitiveness

    Companies are required to pay import VAT when they import goods from a country outside the European Union. This VAT is usually refunded later, but until then, it ties up companies’ liquid assets. The stimulus package now gives companies an additional six weeks by postponing the date on which import VAT is due to the 26th of the following month. This gives companies extra liquidity and makes Germany a more attractive location for transport. The measure will enter into force as soon as the customs administration and businesses have met the IT requirements.

    Tax-related assistance for companies and employees during the pandemic

    To support companies and employees in the pandemic, the German government has adopted a range of tax-related assistance measures. You can find an overview here.

    Updating corporate tax law: more options to become more competitive

    The stimulus package is updating corporate tax law in order to make companies more competitive. This will allow, among other things, partnerships to be taxed as corporations, and the tax reduction for business income to be increased to four times the base amount of trade tax.

  • A simplified regime for the short-time work scheme to safeguard jobs

    Graphic: Short-time work benefit extended BildVergroessern

    Because of the pandemic, many companies in Germany have seen a sharp decline in business, with some sectors recording no income at all for certain periods of time. As early as March, the German government introduced a simplified regime for accessing short-time work benefits to safeguard jobs. For companies that introduce short-time work by 31 December 2020, the eligibility period for short-time work benefit has been extended to a maximum of 24 months (and until 31 December 2021 at the latest).

    The stimulus package has also allowed for an increase in short-time work benefits: Depending on the duration of short-time work, the Federal Employment Agency covers 60–80% of lost wages; for parents, 67–87% of lost wages are covered. These increases apply until 31 December 2021 for all employees who became eligible for short-time work benefits by 31 March 2021.

    For more information on short-term work benefits, please click here.

    Safeguarding apprenticeship places: training the skilled workers of tomorrow

    Young people need career prospects, and Germany needs skilled workers if it wants its economy to stay competitive in the future. Now is not the time for the apprenticeship system to stall. For this reason, the stimulus package makes sure that school leavers can take up their apprenticeships and that those already in an apprenticeship can complete their training properly. For example, small and medium-sized enterprises which do not reduce the number of apprenticeships offered in 2020 compared to the three preceding years will receive a one-off premium of €2,000 for each new apprenticeship contract they conclude.

    Employee participation in companies: making Germany more attractive for investment and innovation

    Germany is gaining in significance as a place for investment in innovative businesses and growth-stage companies. The stimulus package is giving employees more options for holding shares in their companies, allowing them to make the most of the opportunities offered by well-regulated, efficient capital markets. The specificities of start-ups are taken into account in this, too.

    Assistance in the event of insolvency: facilitating a fresh start

    A lot of companies have run into financial difficulties due to the Covid-19 pandemic. The German government is taking a range of measures to help ensure demand and liquidity, and to prevent insolvencies. In cases where this, too, fails, a swift fresh start needs to be facilitated. Thus natural persons will see the debt relief procedure shortened to three years. For companies that become insolvent, a new restructuring procedure will be introduced that will take place before the actual insolvency. This, too, will facilitate a fresh start and boost the chances of a return to stability.

  • Assistance under the Neustart Kultur (“a fresh start for culture”) programme

     

    Cultural institutions play an important role in social life in Germany and are an essential part of our everyday life. It is important, then, that cultural institutions receive financial support to help them reopen quickly after the pandemic-related closures end. This is why the Neustart Kultur rescue package was created: It provides around €1 billion in additional funding for companies operating in the cultural sector and runs until the end of 2021. The funds can be used for things such as investments, personnel costs or the creation of digital cultural activities. Those eligible for support include, among others, nightclub operators, concert halls and theatre companies.

    Investing in cultural institutions: supporting the reopening

    Mandatory hygiene protocols and distancing rules are forcing cultural institutions to make architectural adjustments and upgrades, some of which are quite extensive. This comes as an additional burden on cultural institutions, most of which are already struggling financially. The Neustart Kultur assistance programme makes available up to €250 million for investments in cultural institutions. These funds can be put towards purchasing online ticketing systems or updating ventilation systems, for example. This support will primarily benefit non-publicly funded businesses, while also providing support to help small cultural institutions as they reopen.

    Emergency assistance for personnel costs: creatives’ exit strategy from short-time work

    From massive slumps in business to complete closures – many cultural institutions have been forced to switch to short-time work. To help creatives return to work, the German government is providing emergency assistance totalling up to €450 million. These funds are intended primarily for personnel costs, and are made available mainly to cultural institutions financed by the private sector. These assistance payments are also intended to boost the number of new contracts being awarded to freelance artists and creatives. The emergency assistance for personnel costs accounts for the lion’s share of the government’s Neustart Kultur programme.

    Driving the digital: promoting alternative and online services

    If the pandemic has shown just how vitally companies need digital technology, it has also revealed how urgently they need to catch up in this area. In the cultural sector, too, there is still more room for improvement when it comes to digital tools. The Neustart Kultur programme is making an important contribution to this by putting up to €150 million from the Federal Culture Fund into boosting digital technology. In parallel, the German government will also continue to press forward with its drive for more digital technology in the cultural world.

    Compensation for additional costs: expanded support

    Even before the pandemic, the German government was providing financial support for certain cultural institutions and projects. If the pandemic causes these institutions to lose income and incur additional costs that cannot be covered through regular institutional funding, the Neustart Kultur assistance programme provides an additional safety net of up to €100 million. A further €20 million are earmarked for private radio broadcasters to compensate for lost advertising revenues.

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    How are you, Germany? Episode 3: The theatre director
    When Oliver Tautorat was forced to shut his theatre in March 2020, his first reaction was one of fear: In this video, Oliver tells us how he, as a creative, was able to overcome the shock, which of the stimulus measures have allowed him to stay afloat until now, and how he plans to get back on track despite some big challenges.

  • The special loan programme: making sure non-profit organisations remain operational

    From youth hostels to charities to workshops for the disabled, many non-profit organisations (NGOs) are suffering from the pandemic-related restrictions and are seeing their revenue shrink drastically. The German government has therefore adopted a special loan programme of €1 billion and will cover 80% of the default risk. The loans will be granted until the end of 2020 and will be capped at €800,000. The programme will benefit NGOs such as holiday homes for disadvantaged families, hostels for school outings, women’s shelters and businesses employing disabled individuals. The decision as to which organisations receive this support lies with the Länder. Starting in August, applications can be submitted to the responsible Land promotional banks.

    For information on further measures in this area, please go to the “Investing in the future” section.

Local authorities Support right where it’s needed

We all live in a town, in a local authority. For us to enjoy good living conditions there, and for local communities to invest in their future, one thing is key: local authorities must have the finances that allow them to take action. This is why the stimulus package boosts local authorities. Click below to read more on the various measures:

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  • Covering accommodation costs: relief for the local authorities’ social security funds

    Local authorities have seen their tax revenues dwindle due to the pandemic. This is hugely problematic because, among other things, local authorities are responsible for the housing of people on social welfare. What is more, the number of social welfare recipients is likely to increase as a result of the pandemic. For this reason, the stimulus package stipulates that the federal government and the Länder will assume up to 75% of accommodation and heating costs. They previously assumed only 50% of those costs. However, local authorities will still be responsible for providing services in this area – after all, they know the local housing market best.

    The GDR’s supplementary pension schemes: federal government to assume higher share of costs

    The Länder of East Germany have a particular financial legacy to deal with: the supplementary and special pension schemes from GDR times. In the course of reunification, the pension rights acquired under these schemes were incorporated into the pension laws of the Federal Republic of Germany. For purely demographic reasons, the costs connected with these rights are now rising sharply and placing a burden on the budgets of these Länder. To ease this burden, the federal government will be assuming 50% of the costs from 1 January 2021 onwards, instead of the previous 40%. This provides those Länder with more fiscal space to increase local investment.

  • Trade tax Solidarity Pact 2020 safeguards government capacity to take action

    Local authorities rely on the revenue from local business tax paid by local companies. This revenue is particularly important in helping local authorities fulfil their responsibility to invest in local infrastructure. As a result of the pandemic and the massive losses it has inflicted on companies, local authorities are expected to lose around €12 billion in trade tax this year. To ensure that local authorities maintain the financial means to continue functioning effectively, the federal government and the Länder are jointly shouldering an equal share of the losses and compensating local authorities via a lump sum payment, as provided for by the Solidarity Pact 2020 for Local Authorities.

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    How are you, Germany? Episode 1: The mayor
    The months of crisis since the outbreak of the pandemic have been weighing heavily on the mayor of the northern German city of Kiel, both on him as an individual and as a public figure with responsibilities for the city's inhabitants. Now Ulf Kämpfer, PhD, wants to make Kiel a model city for sustainability and digital technology. In the video, he explains how the stimulus package is helping him to do this – and how Germany can get back on track after the pandemic.

  • Compensation for loss of fare revenue: public transport stays strong

    Especially in rural areas, local public transport is really important to people. This is why the federal government is providing support to the Länder in financing the public transport provided by local authorities. People have been using public transport much less during the pandemic. This means that public transport companies have lost a large share of the revenue they normally derive from passenger fares. To compensate for these revenue losses, the stimulus package provides for a one-off, €2.5 billion increase in federal subsidies for public transport.

    Federal aid: strong support for transport companies

    For some transport companies, the decline in revenue from passenger fares could spell serious financial difficulties. In response, the federal government has begun drafting a federal framework to allow the Länder to grant subsidies to public transport companies to compensate for these revenue shortfalls. This has already been approved by the European Commission.

    Climate action: More support for local authorities

    When it comes to climate action, local authorities make an invaluable contribution. However, many local authorities have run into financial difficulties due to the pandemic. To support local authorities in fulfilling their responsibilities under the National Climate Initiative, the federal government is lowering local authorities’ contributions to the relevant support programmes. In 2020 and 2021, the federal government will be making available €50 million annually for this purpose. This benefits local authorities as well as local companies, cultural institutions and universities.

    National Climate Initiative

    The National Climate Initiative promotes climate action projects throughout Germany. The goal is to make a substantial contribution to reaching Germany’s climate targets. Germany is aiming to be mostly carbon neutral by 2050.


    Support for sports: more funds for modern sports facilities

    Sports take on special importance in times of crisis. All the more reason to make sure that sports facilities don’t suffer from the revenue shortfalls that local governments have experienced as a result of the pandemic. In 2020 and 2021, an extra €150 million will be made available to finance sports facilities.

    For information on further stimulus measures in this area, please go to the “Investing in the future” section.

Investing in the future A better future for Germany

The stimulus package is by far the largest and most extensive of its kind in German history. This is why it is also intended as an investment in Germany’s future. The package is designed to help make Germany fit for the future and provide financing that is tailored to modernising the German economy. From climate action, energy generation and sustainable mobility, to digital technology and the education and health systems – Germany can be, and wants to be, a world leader. Click below to read more on the various measures:

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  • Innovation premium for the purchase of electric vehicles: supporting the transition to electric

    The German government wants to facilitate the transition to electric mobility: This applies as much to ordinary consumers buying an electric vehicle as it does to companies using entire fleets. This is why the “eco-bonus” was introduced previously. Under the stimulus package, this bonus will be doubled and paid out as an “innovation premium”. For example, this would translate into the following: For a limited period up to 31 December 2021, the federal government would double its contribution from €3,000 to €6,000 when an electric vehicle with a list price of up to €40,000 is purchased. For electric company cars, the maximum price is raised from €40,000 to €60,000, with tax set at 0.25%.

    Taking electric mobility to the streets thanks to expanded charging infrastructure

    If you want to travel through Germany in an electric car, you need to be able to rely on finding enough charging stations. Expanding the charging infrastructure is a necessary requirement for advancing e-mobility in Germany. For this reason, the stimulus package makes equal provisions for expanding the network of reliable, modern charging stations as well as for promoting research and development in the area of electric mobility. A standardised nation-wide payment system for charging stations is to be put in place soon. Additional investments of €2.5 billion will be put towards this goal.

    A carbon-emissions-based motor vehicle tax: rewarding climate-friendly mobility

    The future of mobility depends on the use of climate-friendly sources of energy that produce as few emissions as possible. With this in mind, motor vehicle tax will in future be based on a car’s carbon emissions. This means that low-emission vehicles will be subject to lower tax. Taxes for newly registered vehicles will be based on their carbon emissions per kilometre; for vehicles emitting over 95g CO2/km, taxes will increase in tiers. The ten-year motor vehicle tax exemption for fully electric vehicles, which has already been put into effect, will be granted until 31 December 2025 and extended until 31 December 2030. With these policies, the German government is sending a clear signal of support for zero-emission vehicles and sustainable mobility.

    A bonus programme for the automotive industry: incentivising investments in the future

    Advances in new technologies, processes and installations create the jobs of tomorrow. This is why we need manufacturers and suppliers in the automotive industry to innovate and invest. To promote exactly that, the federal government has put in place a bonus programme of €2 billion, which will give businesses that invest in the future targeted support in 2020 and 2021.

    Vehicle fleet replacement programmes: supporting electric mobility on the road

    Social service providers travel a lot and need affordable transport. This means that they can make a substantial contribution to lowering emissions from road traffic. To help them make the switch to electric mobility, the federal government has created the vehicle fleet replacement programme “Social & mobile”. The programme will run in 2020 and 2021 and is designed to promote electric mobility in towns and cities. The programme has a total of €200 million at its disposal. Another programme to promote the switch to electric mobility among small and medium-sized enterprises such as craft and trade businesses is also currently being prepared.

    Modernising buses and HGVs for climate-friendly public transport

    Public transport operators are also gradually incorporating environmentally friendly vehicles into their fleets. To accelerate this process, the federal government is investing in a programme to modernise bus and HGV fleets. Under the provisions of the stimulus package, funding for electric buses and their charging infrastructure will be increased to €1.2 billion. The programme will run until the end of 2021 and will be available to private-sector and local government transport operators.

    Replacement programme for HGVs: making the roads of Europe more climate-friendly

    Sustainable mobility is an issue of European significance and is especially important for transport companies. For this reason, the federal government is pressing for the swift adoption of an EU-wide “HGV fleet replacement programme 2020/21” that aims to promote future purchases of HGVs that meet the latest Euro VI emission standard: The programme would provide for a €15,000 subsidy for the replacement of Euro V HGVs with Euro VI HGVs. In the case of Euro III and Euro IV HGVs, the replacement subsidy would be €10,000. These subsidies would aim to promote more climate-friendly HGVs on European roads.

    Extra equity for Deutsche Bahn: a sustainable move for Germany

    Travelling by train is particularly environmentally friendly. Even before the pandemic, the German government supported Germany’s main railway company Deutsche Bahn in its efforts to advance the expansion, modernisation and electrification of its railway network. Under the Climate Action Programme 2030, the federal government is already providing an annual €1 billion in additional equity to Deutsche Bahn between 2020 and 2030. In light of the pandemic-related revenue losses, the stimulus package is expanding this financial support. Deutsche Bahn will receive additional equity of €5 billion from the federal government to keep Germany on track for a sustainable future.

  • Hydrogen: a fundamental building block of the energy transition

    Hydrogen technologies will play a key role in advancing and completing the energy transition. The German government has presented a concrete plan to promote hydrogen technologies in its National Hydrogen Strategy. The government is putting a total of €7 billion towards this ambitious investment package. The aim is to make Germany a world leader in state-of-the-art hydrogen technology. The Strategy provides for the construction of industrial production plants so that these technologies can be used at industrial scale in Germany. In addition, the network of hydrogen refuelling stations will be expanded to promote hydrogen use in HGVs. This will lay the foundation for new export technologies and pave the way for carbon neutrality in HGV traffic.

    Hydrogen – the climate-friendly energy source of tomorrow

    Hydrogen is a chemical element and constitutes a large part (about 75%) of the mass of our solar system. Many experts consider hydrogen the raw material of the future. Its greatest potential lies in its use as a renewable energy source. This is because it can be used in almost all areas of consumption, including, for example, mobility, heating, and electricity.


    Expanding the use of renewable energy: making sure everyone’s a winner

    Regardless of the pandemic, another crisis continues to unfold: the climate crisis. For this reason, expanding the use of renewable energies remains a top priority for the German government. To this end, the current “cap on photovoltaics”, which sets a limit on payments for solar energy that is fed into the grid, will be abolished. In addition, the target for the expansion of offshore wind energy by 2030 will be increased from 15 to 20 GW. At the same time, the Länder will be given the right to stipulate that the minimum distance between wind turbines and residential buildings must be at least 1,000 metres. The aim here is to ensure that local residents accept wind turbines more readily. Furthermore, local authorities and residents in particular will benefit more from local wind turbines in financial terms.

    More funding for the CO2 Building Modernisation Programme: taking sustainability into the home

    Climate-friendly behaviour begins at home. For this reason, funding for the CO2 Building Modernisation Programme for 2020 and 2021 will be increased from €1.5 billion to €2.5 billion. The German government is also setting up a programme to promote climate adaptation in social services institutions and is funding energy-efficient retrofitting for municipal buildings.

    Subsidy to reduce the electricity surcharge

    For further information on measures in this area, please go to the “For all households” section.

  • A nationwide 5G network: connecting Germany to the future

    Germany wants to eliminate dead spots and put in place a mobile web that is even faster: Germany is therefore investing in expanding its 5G network with the goal of achieving nationwide coverage and eliminating dead spots by 2025. The German government’s new mobile infrastructure company has €5 billion at its disposal for this purpose.

    Investment in AI: Germany as a smart research hub

    In almost all sectors of the economy, artificial intelligence (AI) has become an indispensable part of process and product innovation. Its importance will only grow in the future. The stimulus package provides for the following in this area: By 2025, planned investment to promote AI will be upped to €5 billion, an increase of €2 billion. In addition to topping up funding for existing programmes, this investment will also be used to acquire additional supercomputers in Germany. Outstanding research and teaching, attractive business and research conditions as well as a state-of-the-art computer and AI infrastructure will make Germany even more attractive as a desirable destination for top researchers and emerging talent. The investments are designed to create the best possible research conditions in Germany and a competitive European AI network.

    The push for a digital transformation in public administration: creating crisis-proof procedures

    An improved public administration urgently needs to embrace the digital transformation. The Covid-19 pandemic has put this in sharp relief. Businesses are also increasingly confronted with the digital transformation and the challenges it brings. Now an amount of €1 billion has been made available for a push to go digital in the public and private sector. The aim is to digitalise public administration in such a way as to accelerate procedures while also enabling local authorities to ensure sustainable energy consumption when using these procedures. The digital transformation of the economy will receive an extra boost from measures to increase write-down options for digital assets and a programme to promote online platforms.

    Constructing quantum computers: new possibilities in research and industry

    Quantum technology is the next major technological leap forward, and we want Germany to be a pioneer on this front. This is why government is funding the development and production of quantum technology in Germany. The goal is for quantum technology to constitute a lucrative pillar of our industry, in the areas of both hardware and software. Plans include the construction of at least two quantum computers. These efforts will benefit from an additional €2 billion from the stimulus package. High-quality research, combined with product development, substantial support to those founding companies and start-ups, as well as new leading-edge clusters for collaborations between science and business are laying the foundations for our quantum future.

    Testing new network technologies: Towards a 6G future and beyond

    Communication technology is constantly evolving. As an industrialised nation, Germany lays great store by maintaining its role as a world leader in this field. To support this goal, the stimulus package will be putting €2 billion towards innovative companies as they develop and test new, software-controlled network technologies. In parallel, the plan is to facilitate market entry for such innovative network technologies. By doing so, the government is supporting advances in communication technologies such as 5G and, later on, 6G.

  • Improved tax allowance for research: developing the future

    Despite the crisis, it is important that companies continue to invest in research and development. By doing so, they improve the future viability of their products and thus the German economy as a whole. This is why the German government is increasing the tax allowance granted for research. The maximum permissible amount used to determine the allowance will be doubled to €4 million per company. This amount will apply retroactively from 1 January 2020 to the end of 2025.

    Reduced co-financing requirements: protecting applied research

    The pandemic has the potential to pose a threat to applied research. This is especially true in cases where the companies co-financing the research are badly hit by the fallout from the pandemic. The German government is therefore reducing companies’ co-financing requirements and supporting large non-university research centres. A total of €1 billion in replacement funding will be made available for promising projects.

    Investment programme for the expansion of all-day schools and all-day care

    For more information on measures in this area, please go to the “For families” section.

    Promoting the expansion of capacities in kindergartens, day-care centres and crèches, as well as extensions, conversions and new buildings

    For more information on measures in this area, please go to the “For families” section.

  • Public Health Services Pact: achieving long-lasting effects

    Developed by the federal government, the Länder and local authorities, the Pact for Public Health Services focuses on strengthening Germany’s health care system. Its top priorities include recruiting more staff as well as acquiring and upgrading technical and digital equipment. The stimulus package will initially be providing €4 billion for this purpose. The Conference of Health Ministers of the Länder will prepare a draft on the specifics by the end of August 2020. The increase of public health services personnel from 2022 onwards will also be tackled. In the long term, the Public Health Services Pact is an opportunity to substantially bolster public health services.

    Programme for Future-Proof Hospitals: raising standards to a new level

    When crisis hits, hospital care is essential. This is one of the reasons why the equipment in German hospitals must meet the highest standards. The Programme for Future-Proof Hospitals puts a total of €3 billion towards ensuring that the health system has up-to-date emergency response capabilities. The programme also funds improvements in digital infrastructure, workflow organisation, communication, telemedicine, robotics, high-tech medicine and documentation. The programme is being implemented on the basis of legislation that expands the scope of the Structural Funds for regional inpatient care structures.

    Protecting ourselves: the CEPI alliance and developing a coronavirus vaccine

    Only when a safe vaccine has been developed can the pandemic-related restrictions on public life end. To make this happen as soon as possible, the federal government supports the CEPI alliance as well as the efforts in Germany to develop a vaccine against the coronavirus. Around €1 billion are to be invested here, and will be put towards existing vaccine development programmes as well as towards new initiatives and research networks.

    CEPI: a coalition to fight viruses

    CEPI stands for Coalition for Epidemic Preparedness Innovations. CEPI is an important project for international cooperation in fighting global infectious disease. Founded in 2017, in response to the 2014-15 Ebola epidemic, the Coalition unites states, foundations, research institutions and pharmaceutical companies in a public-private partnership.

How are you, Germany? Reactions to the Coronavirus crisis and the stimulus programme

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How are you, Germany?

Stimulus programme How are you, Germany?
Episode 1: The mayor

The months of cri­sis since the out­break of the pan­dem­ic have been weigh­ing heav­i­ly on the may­or of the north­ern Ger­man city of Kiel, both on him as an in­di­vid­u­al and as a pub­lic fig­ure with re­spon­si­bil­i­ties for the city's in­hab­i­tants. Now Ulf Kämpfer, PhD, wants to make Kiel a mod­el city for sus­tain­abil­i­ty and dig­i­tal tech­nol­o­gy. In the video, he ex­plains how the stim­u­lus pack­age is help­ing him to do this – and how Ger­many can get back on track af­ter the pan­dem­ic.

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Episode 2: The single mother 

When the Covid-19 pan­dem­ic start­ed, sin­gle moth­er Yasemin Arpaci was caught un­awares. She and her son were ini­tial­ly forced to man­age the bur­den all on their own. In the video, she tells the sto­ry of how the two of them coped and what sup­port they had.

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Stimulus programme How are you, Germany?
Episode 3: The theatre director

When Oliv­er Tau­torat was forced to shut his the­atre in March 2020, his first re­ac­tion was one of fear: In this video, Oliv­er tells us how he, as a cre­ative, was able to over­come the shock, which of the stim­u­lus mea­sures have al­lowed him to stay afloat un­til now, and how he plans to get back on track de­spite some big chal­lenges.

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Stimulus programme How are you, Germany?
Episode 4: The event managers 

The Covid-19 pan­dem­ic came as a re­al blow to the events sec­tor. When all events were can­celled, Na­dine Bortscheller and Ann-Kathrin Schmidt at first lost sleep over the sit­u­a­tion. In the video, the two wom­en ex­plain why bury­ing their heads in the sand was not an op­tion, and what they want fu­ture pol­i­cy to look like.

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