1. Spending Measures (Budget Allocations)
The total volume of budgetary allocations amounts to EUR 353.3 billion, with a total amount of €819.7 billion guarantee package.
€ 50 billion as short-term liquidity support for SMEs, freelancers and self-employed in the form of one-time non-refundable financial aid of up to € 15,000, depending on the number of employees.
Swift liquidity assistance for companies (“Schnellkredit 20202”)
- The 100% federal guarantee backed accelerated credit lending facilities and loan grants for medium sized enterprises (MEs) for capital purchases (investments) and running costs (operating resources).
a) Companies with more than 10 employees and market presence since at least January 2019; and
b) A record of profit made in 2019 or on average basis over the past 3 years.
Are eligible to receive:
a) Max. Loan amount: up to 3 monthly sales in 2019);
b) Up to € 500K (MEs with up to 50 employees);
c) Up to € 800K (MEs with more than 50 employees).
a) 3% interest rate on 10-year loan term.
2. Tax Measures (Deferral of Payroll Tax Obligations, Extensions of Tax Filing Deadlines)
Deferment of tax payments
- Companies and self-employed individuals can apply with their tax office for an interest-free tax deferment until 31 December 2020.
Adjustment of pre-payments
- Companies and self-employed individuals can adjust the amount of their income tax and corporation tax pre-payments. The same applies to the measurement basis used to calculate trade tax pre-payments.
Suspension of enforcement measures
- With regard to arrears as well as taxes that have become due by this point, enforcement is being suspended until the end of 2020. Late payment penalties that would normally be assessed during this period are being waived.
Deferment of social insurance contributions
- Companies can apply for deferment of social insurance contributions for March, April and May until the due date for the payment of contributions in June 2020.
Tax reporting deadlines
- No changes.
3. Subsidies to Preserve Jobs, Employee Benefits, Food Assistance
- If the employee is unable to work due to a corona virus infection and is thus prevented from performing his work, he is entitled to continued remuneration in case of illness for a period of six weeks. After this period, people with statutory health insurance are generally entitled to sickness benefit.
Short-time work allowance
- Entitlement to short-time work allowance exists if at least 10 per cent of the employees have a loss of earnings of more than 10 per cent.
- Social security contributions for lost working hours are reimbursed at 100 percent.
- Negative working time account balances can be disregarded prior to the payment of short-time allowances.
- Short-time allowances are also available for temporary contract workers.
- The short-time allowance amounts to 60% of lost net wages. If an employee lives in a household with at least one child, the short-time allowance amounts to 67% of lost net wages.
- Short-time allowances can be drawn for at most 12 months.
4. Public Loan Guarantees and Expansion of Loans to Businesses
The total volume of guarantees is EUR 460 billion.
- If necessary, the guarantee framework can be increased by the Budget Committee of the German Parliament by up to EUR 93 billion on short notice by the Federal Ministry of Finance.
KfW instant loan (KfW-Schnellkredit für den Mittelstand)
- The loan amount for each company is up to 3 months' turnover in 2019, up to a maximum of EUR 800,000 for companies with more than 50 employees, up to a maximum of EUR 500,000 for companies with up to 50 employees.
- Current interest rate of 3% for a term of 10 years. The bank receives a 100% liability guarantee from the KfW, secured by a guarantee from the Federal Government.
KfW Entrepreneur Loan (KfW-Unternehmerkredit) and ERP Start-Up Loan (ERP-Gründerkredit-Universell)
- Conditions are be loosened by raising the level of risk assumptions for operating loans and extending these instruments to large enterprises with a turnover of up to €2 billion (previously, the limit was €500 million). Higher risk assumptions of up to 80% for operating loans of up to €200 million are expected to increase banks’ willingness to extend credit.
Direct participation for syndicated financing (Direktbeteiligung für Konsortialfinanzierung)
- KfW participates in syndicated financing for investments and working capital of medium-sized and large companies. KfW assumes up to 80% of the risk, but no more than 50% of the total debt.
- The KfW risk share amounts to at least EUR 25 million and is limited to 25 % of the annual turnover in 2019 or twice the wage costs of 2019, or the current financing needs for the next 12 months.
5. Student Loan Relief
Anyone who is already in the repayment phase for the loan portion of support services under the BAföG can apply for an exemption from the Federal Office of Administration if the current income is no longer sufficient to meet the repayment obligation.
Anyone who otherwise still has to repay an educational loan from the Federal Office of Administration can apply for a deferral under the current conditions.
Note: Student loan grant is available to anyone and not just German nationals and permanent residents. There are no post Brexit suspensions of loan receivables.
6. Insolvency Law Relief
- The obligation to apply for insolvency proceedings is suspended
- The lift of an obligation to apply for insolvency applies retroactively from 1 March 2020 and is initially scheduled to end on 30 September 2020.
- The suspension is valid under two conditions:
- material insolvency has to be the result of the coronavirus pandemic
- it must be likely that current illiquidity is only temporary.
- It is automatically presumed that both of these requirements are met if the company was not insolvent on 31 December 2019.
- Managers have only limited liability for payments made following the company's entry into insolvency.
- New loans granted to companies affected by the COVID19 pandemic are not to be regarded as improper.
- The possibility of creditors to enforce insolvency proceedings by filing for insolvency is restricted for three months.
1. Reduction of Interest Rates
KfW Special Program on Interest rate improvements:
- between 1% and 1.46% p.a. for SMEs and MEs, and
- between 2% and 2.12% p.a. for larger companies (previously interest rate risk was based exclusively on credit rating classes).
2. Expansion of Central Bank’s Holdings of Government Bonds
The Tenor of the German Government
- The three “instruments of solidarity” that seemed to be largely consensual:
- Precautionary credit lines from the European Stability Mechanism Euro Rescue Fund for particularly affected EU countries such as Italy;
- Guarantee funds for corporate loans from the European Investment Bank;
- And the short-time worker program called "SURE” to be developed and offered by Eurogroup finance ministers as requested by the European Commission.
3. Other Measures to Support Flow of Credit
Consumer loan agreements concluded before 15 March 2020 are covered by a deferral.
- Consumer loan agreements which were concluded before 15 March 2020 due in the period from 1 April 2020 to 30 June 2020 are granted a deferral of payment for a period of three months.
KfW special program
- Financial accommodation assistance for SMEs by allowing operating resources to be financed on a 90% risk credit basis in contrast to what is typically available at commercial banks and savings banks.
- Agile credit application management for loans up to € 3 million with simplified procedure and proof required.
4. Suspension of Foreclosures/Evictions
Protection of tenant from eviction due to payment arrears
- The right of lessors to terminate rental and lease agreements due to payment arrears, due to the effects of the Corona pandemic, is restricted for the period from 1 April to 30 June 2020.Arrears of payment from the period 1 April to 30 June 2020 do not entitle the landlord - for a period of 24 months - to terminate the lease.
- The tenant/lessee’s obligation to timely pay rental due remains in effect during this time. Legal protection from eviction ends as of June 30, 2020. However, the landlord may give notice of termination and assert the right to claim repossession (during the “grace period” e.g.) although such repossession cannot take place until after 30 June 2020.
5. Reductions/Suspensions of Mortgage Payments
The regulation on loan agreements also applies to landlords, as long as they act as consumers rather than as entrepreneurs. This is the case when the lease is not classified as a commercial activity but as a private asset management. The distinction between commercial activity and private asset management is determined on a case by case basis.
Consumer loan contracts signed before 15th of March 2020 are eligible for three month’s deferrals on repayment, interest and repayment services of a loan agreement. (Prerequisite: The borrower must have been affected by the coronavirus pandemic crisis).
6. Asset Purchases (Liquidity Facilities, Purchase of Private and Public Sector Securities, Acquiring Equity of Larger Affected Companies)
Veto on foreign corporate buyouts and non-European investments.
7. Exchange Rate Adjustments
Flexible exchange rates may undertake parallel co-movements in the absence of formal pegging due to various factors including the intensity of trade links and financial ties, patterns of trade, and expectations regarding economic policy risks.
1. Social Distancing
The federal and state governments decided that current restrictions on public life will remain in place until 19 April 2020.
- In public, a minimum distance of at least 1.5 metres must be maintained to people other than family members. In public places, the person is only allowed to be alone, with another person not living in the household, or with members of the household.
- It is still permitted to go to work, to emergency care, go grocery shopping, visit a doctor, participate in business meetings, necessary appointments and examinations, help others or individual sports and exercise in the fresh air, as well as other essential activities.
- Group celebrations in public places, in apartments and private facilities, are not permitted. Public order authorities and the police will monitor compliance with the rules. Anyone who violates the contact restrictions must expect sanctions.
- Lock-down (Partial border closure; movement of persons are severely restricted with exception of necessary and/or essential travels; Individual sports and exercise in the fresh air are still possible).
2. Closure of Public Places for Gathering
Public places are closed for public gatherings.
- State governments are in a position to take further restrictive measures.
3. Closure of Non-Essential Businesses
Pharmacies, gas stations, banks, delivery services, post offices and other central services subject to increased hygiene requirements remain open. Access should be controlled, and queues avoided.
Service suppliers and craftsmen are permitted to carry out their activities.
All health care facilities will remain open.
Hospitality establishments are closed. However, takeaway services are still available. Delivery services also continue to deliver food. The above regulations are adopted on a Federal level.
Other non-essential businesses, including hairdressers, beauty salons, massage practices, tattoo studios, where physical proximity is unavoidable, are closed.
Bars, clubs, discotheques, pubs and similar establishments are closed to the public.
Theatres, operas, concert halls, museums, trade fairs, exhibitions, cinemas, amusement parks and zoos, as well as providers of leisure activities (indoors and outdoors), cease to be open to the public.
Sports facilities, fitness studios, swimming and leisure pools, playgrounds and any other retail outlets are also subject to the restrictions.
State governments are in a position to take further restrictive measures.
4. School Closures
Schools and other educational establishments are closed
- The closure of schools and other educational establishments is within the competence of States.
- As for instance:
- in Baden-Württemberg, all schools, kindergartens and other educational establishments will remain closed until 19 April 2020 at least subject to further decisions. Online study is still possible. Under exceptional circumstances, day-care services is provided to allow parents to continue working in particular for so called essential jobs like the medical or public sector https://www.baden-wuerttemberg.de
- in Bayern schools and other educations establishments remain closed until 19 April 2020. https://www.bundesregierung.de
Treatment of intensive care patients from Italy, France and the Netherlands
- Almost 200 patients have been transferred to Germany from France, Italy and the Netherlands, and there are commitments to allocate over 50 additional places.
Distribution of medical supplies
- Germany provided 7.5 tons of relief supplies for Italy, including respirators and anaesthetic masks.
German Medical personnel in Italy
- Since April 1, a team of doctors and nurses from the University Hospital of Jena has been working in a clinic near Naples.
- Germany helps EU citizens to get home
- Along with German citizens, at least 3600 EU citizens and other third-country nationals were taken from the various distant location around the globe.
German-supported health projects refocus their activities to support the healthcare systems in their response to Coronavirus pandemic (Northern Iraq, Cambodia and Kyrgyzstan)
Multilateral and Bilateral Help to Haiti
- Help to the government of Haiti in fighting pandemic and strengthening the government fostering human rights.