The flat-rate loss carryback in Germany
The German Ministry of Finance has announced new measures to assist companies facing liquidity problems due to COVID-19. Such companies will be able to receive a refund of taxes paid for 2019, in addition to tax amounts already paid for 2020.
Due to the measures taken, affected taxpayers can apply for a reduction in advance payments of income tax or corporate tax for 2019 based on the transfer of losses at a fixed rate. Taxpayers are considered to be affected, whose advance payments for 2020 have already been reduced to zero.
The flat-rate loss carryback from 2020 is equal to 15% to 15% of relevant income, which was used to determine advance payments for 2019, subject to a maximum amount of 1 million euros or 2 million euros in case of joint assessment. Based on this, advance payments for 2019 are recounted and prepayments are reimbursed.
In the event that the company successfully restores its activities and makes a profit in 2020, refunds will need to be returned.
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