On March 25, 2020, Germany’s lower house of parliament, the Bundestag, approved a multi-billion-euro aid package to manage the economic impact of the coronavirus crisis and gave the green light to the supplementary budget.
The crisis surrounding the coronavirus is hitting the economy hard. Not wanting to leave businesses and the self-employed to fend for themselves in responding to its economic impact, the federal government has come up with an extensive package of protective measures. On March 25, 2020, the Bundestag approved the supplementary budget and freed up 156 billion euros in financial resources. An economic stabilization fund worth 600 billion euros was also adopted, with this even overruling the debt ceiling. While it is equally necessary for Germany’s upper house of parliament, the Bundesrat, to give its approval on March 27, this is seen as a certainty.
Larger businesses will be able to benefit from the federal government’s comprehensive 600-billion-euro support package. The government wants to provide important guarantees to businesses and even take companies either wholly or partially into public ownership if necessary. Should it come to that, the plan is for the companies to be privatized again at the end of the crisis. However, it is by no means possible for every business to receive assistance under this support package, it only being intended for businesses with high turnover and at least 250 workers. Smaller firms that play a key role in relation to infrastructure may also potentially be covered.
Other small firms and the self-employed, on the other hand, can expect to receive direct grants. A total of 50 billion euros has been allocated for this purpose, with the money to be channeled through the federal states.
Moreover, it is possible to take out a loan with the German state-owned development bank, the KfW, which has prepared various programs. Businesses can also apply, for instance, for tax relief and a deferral of tax payments.
All these measures are designed to maintain companies’ liquidity to ensure that they weather the coronavirus crisis. Of course, there are many other pressing legal issues that need to be addressed in addition to the much-needed financial assistance. What happens if it is not possible to render contractual performance? Can social security contributions be deferred? What are the implications of the coronavirus pandemic for capital markets, and what action can banks, stock corporations, foundations, and family offices take to counter this?
We at the interdisciplinary commercial law firm MTR Rechtsanwälte are able to serve as a single point of contact for expert advice and solutions on how best to respond to the coronavirus crisis.
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