Corona crisis: emergency aid for freelancers and small businesses

The state provides one-time payments to small businesses to compensate for lost revenue due to the Corona crisis.

Solo self-employed people, microentrepreneurs and small family businesses in particular are facing existential problems as a result of the Corona crisis. While revenues are falling away, running costs remain, reserves are quickly depleted and there is often no access to credit. With an unbureaucratic emergency program, the federal and state governments are providing one-time emergency aid. This is intended to help with rental and leasing costs in particular, as well as with other operating costs, e.g. loans for business premises or leasing rates.

To this end, on March 23, 2020, the federal cabinet approved emergency aid for small businesses, the self-employed, freelancers and farmers of up to 50 billion euros. Since March 30, 2020, the federal funds have been available to the states, which are responsible for processing and disbursing the emergency aid. One reason for the processing by the states is that many states have set up their own aid programs to supplement and expand the scope of the federal program, for example through one-off payments for businesses with more than 10 employees.

• Eligible: Eligible to apply for the federal program are solo self-employed persons, freelancers and small businesses, including farmers, with up to 10 full-time employees who operate in the market as a business. They must run their business from a domestic permanent establishment or have a domestic place of management and be registered with a German tax office.

• Scope: The emergency aid serves to secure economic existence and to bridge acute liquidity bottlenecks as a result of the Corona crisis. Companies and self-employed persons with up to 5 employees can apply for a one-off grant of up to 9,000 euros for three months; companies with up to 10 employees can apply for a one-off grant of up to 15,000 euros. Provided the landlord reduces the rent by at least 20 %, the unused grant can also be used for two additional months.

• Proof: To prove the liquidity shortage caused by the Corona crisis, the applicant must affirm that it has experienced economic difficulties as a result of the Corona pandemic. For this condition to be met, the company must not have already been in financial difficulties on December 31, 2019. The assurance will initially suffice as proof, but will be reviewed later. Presumably, the federal states will forward the application data to the tax offices, which will then check the requirements for the one-time payment during the assessment for 2020.

• Procedure: The emergency aid program deliberately dispenses with a bureaucratic application procedure in order to ensure rapid and unbureaucratic disbursement. However, the information provided on the application must be correct - false information can constitute subsidy fraud and lead to corresponding criminal consequences.

• Disbursement: The federal states have taken over the implementation and payment of the aid. Applications must be submitted to the relevant state authority by May 31, 2020 at the latest. A list of contact persons can be found in the article "Important links for the individual federal states".

• Cumulation: Cumulation with other aid in connection with the Corona pandemic is possible in principle. However, any overcompensation must be repaid.

• Tax liability: The one-off payments do not have to be repaid, but are considered taxable operating income. To ensure that the subsidy benefits companies in full now, when it is important, it is not yet taken into account in the advance tax payments for 2020. Only when the tax return for 2020 is filed will the tax liability come into play. Only if a positive profit has been generated in 2020 will the individual tax rate be due on the subsidy.