Subsequent reduction of advance payments for 2019

In the Corona crisis, the tax offices grant a retroactive reduction of advance payments for 2019 upon request if a loss that can be carried back is expected for 2020.

As a result of the Corona crisis, the income of many taxpayers has decreased significantly compared to the previous year, as a result of which they expect a loss for 2020 that can be carried back. Taxpayers who have been not insignificantly negatively affected by the Corona crisis and whose assessment for income or corporate income tax for 2019 has not yet been completed can therefore apply for a reduction in advance payments for these taxes for 2019.

A precise forecast of losses is often difficult. Therefore, the reduction of advance payments for 2019 is also possible on the basis of a loss carryback determined as a lump sum. Of course, a higher loss that can be carried back can also be claimed in individual cases by submitting detailed documentation.

• Motion: The lump-sum loss carryback from 2020 for the subsequent reduction of advance payments for 2019 is only possible upon application. This must be submitted to the tax office in writing or electronically and is possible at the same time as the application for reduction of advance payments for 2020.

• Claim: The lump-sum loss carryback can only be claimed by taxpayers who generate profit income (traders, freelancers, farmers and foresters) or income from renting and leasing during 2020. Those who have parallel income from other types of income (e.g. capital gains) can also claim the lump-sum loss carryback.

• Concern: The applicant must be directly and not insignificantly negatively affected by the Corona crisis. The tax office regularly assumes this to be the case if the advance payments for 2020 have been reduced to zero euros and the taxpayer asserts that he expects a not insignificant loss for 2020 due to the Corona crisis.

• Height: The lump-sum loss carryback from 2020 amounts to 15 % of the sum of the relevant income (business and rental) on which the advance payments for 2019 were based. It is limited to an amount of EUR 1 million (EUR 2 million in the case of joint assessment). The advance payments for 2019 are then reassessed by the tax office, taking into account the lump-sum loss carryback from 2020.

  

• Tax assessment 2019: Because the actual loss carryback from 2020 can only be taken into account in the assessment for 2019 after the tax assessment notice for 2020 has been issued, a reduction in the advance payments for 2019 after the assessment notice for 2019 would therefore generally first result in an additional payment being due. As this would contradict the purpose of securing liquidity, the tax offices are to defer the back payment for 2019 attributable to the loss carryback taken into account in the advance payment procedure without interest upon request until no later than one month after notification of the tax assessment for 2020. The prerequisite is that the taxpayer can still assume a not insignificant loss for 2020 when submitting the tax return for 2019.

• 2020 Tax Assessment: If the tax assessment for 2020 results in a loss carryback, the previously assessed and deferred additional payment for 2019 will no longer apply. If the assessment for 2020 does not result in a loss carryback, the previously deferred additional payment for 2019 must be paid within one month of the notification of the tax assessment for 2020. If the assessment for 2020 results in a loss carryback, but the tax reduction is less than the amount deferred to date, the remaining back payment for 2019 is due within one month of notification of the corrected tax assessment for 2019.