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Aid programmes for self-employed individuals, freelancers, small and medium-sized businesses (SME)

Bridging Aid Phase II covers the period of September to December 2020. Applications must be filed by a tax consultant, a chartered accountant or a lawyer by 31 March 2021.

The funding is available to small and medium-sized businesses (SME), solo self-employed individuals and freelance workers in their main occupation across all sectors. To be eligible, revenues must have declined by at least 50% in two consecutive months between April and August 2020 compared to the prior-year months or else total revenues must have declined by an average of at least 30% in the same period.


  • Bridging aid of 40% of eligible fixed costs if revenues declined by 30% to 50% on the prior-year month
  • Bridging aid of 60% of eligible fixed costs if revenues declined by 50% to 70% on the prior-year month
  • Bridging aid of 90% of eligible fixed costs if revenues declined by more than 70%
  • Personnel costs not covered by short-time compensation are reimbursed as a lump sum of 20% of other fixed operating costs
  • The maximum amount of bridging aid is EUR 200,000 for a period of four months
  • Associated companies can only apply jointly for all associated companies 
  • It will be determined within the final account whether the aid is granted as the "Bundesregierung Fixkostenhilfe 2020" or "Bundesregelung Kleinbeihilfen"
    • „Bundesregelung Fixkostenhilfe 2020“ aids can be granted as a contribution to a company's uncovered fixed costs of up to 10 million € per company or company group. A proof of losses amounting to the claimed aids is required. Depending on the size of the company, the aid is limited to 70 % or 90 % of uncovered fixed costs.
    • „Bundesregelung Kleinbeihilfen“ aids can generally be granted amounting to 1.8 million € per company or association of company group. 

On request, KBHT will also be happy to support and advise you in matters related to Bridging Aid Phase II.

With Germany in lockdown, many businesses are again affected by temporary closures. As a result, the federal government grants extraordinary economic aid to compensate them for financial losses.

The extraordinary economic aid covers the months of November and December 2020. Applications can be submitted by tax advisors, auditors or lawyers until 30 April 2021.


The bridging aid phase III covers the months of November 2020 until June 2021. Applications can be submitted by tax advisors, auditors or lawyers.

Companies with a corona-caused decline in review of at least 30 % can make use of the tiered reimbursement of fixed costs.

The catalogue of eligible fixed costs has been extended. 

The maximum amount for this aid is 1,500,000 € per month.

Solo self-employed individuals can apply for the New Start Assistance instead of bridging aid phase III. The New Start Assistance can amount up to 7,500 € and covers the months until June 2021.

In terms of state aid law - as with the bridging aid phase II - it is possible to choose whether the aid should be granted as „Bundesregelung Fixkostenhilfe 2020“ oder der „Bundesregelung Kleinbeihilfen“ gewährt werden soll.

„Bundesregelung Fixkostenhilfe 2020“ aids can be granted as a contribution to a company's uncovered fixed costs of up to 10 million € per company or company group. A proof of losses amounting to the claimed aids is required. Depending on the size of the company, the aid is limited to 70 % or 90 % of uncovered fixed costs.

„Bundesregelung Kleinbeihilfen“ aids can generally be granted amounting to 1.8 million € per company or association of company group. 

On request, KBHT will also be happy to support and advise you in matters related to Bridging Aid Phase III.

Applications for grants under the emergency aid programme could be filed from 27 March 2020 up to 31 May 2020. The process varied by federal state.

In North Rhine-Westphalia (NRW), applicants initially received a one-off grant of EUR 9,000, EUR 15,000 or EUR 25,000, depending on the number of employees. The actual liquidity shortfall may be determined and declared to the relevant regional authority at a later stage as part of a review process. Any overpaid amounts must be repaid.

The review process was temporarily suspended as a result of sharp criticism. In talks with the federal government, the state of NRW was able to negotiate a number of improvements, particularly with respect to personnel costs or deferred payments. The review process will resume shortly. At this stage, reviews must be filed by 30 November 2020. Any overpaid amounts must be repaid by 31 March 2021.

Applications for Bridging Aid Phase I could be filed up until 9 October 2020. The aid covered the period from June to August 2020.

Businesses were eligible to apply for funding if, as a result of the coronavirus pandemic, their revenues in April and May 2020 declined by at least 60% on the same period of 2019 and in the months of June to August 2020 by at least 50% on the previous year.


  • Bridging aid of 40% of fixed operating costs if revenues declined by 40% to 50% on the prior-year month
  • Bridging aid of 50% of fixed operating costs if revenues declined by 50% to 70% on the prior-year month
  • Bridging aid of 80% of fixed operating costs if revenues declined by more than 70%
  • The maximum amount of bridging aid is EUR 150,000 for a period of three months.
  • Businesses with up to five employees could receive up to EUR 9,000, while businesses with up to ten employees could receive up to EUR 15,000. These maximum amounts could be exceeded only if justified in exceptional cases.

Tax Measures

The German tax offices have been instructed to defer outstanding tax liabilities - without all too strict requirements - in substantiated individual cases. The simplified deferral option applies as a matter of principle to all types of tax, i.e. in addition to income tax, corporation tax, the solidarity surcharge and trade tax, it also applies to value-added tax. Wage tax and capital gains tax cannot be deferred. The Federal Ministry of Finance and the tax authorities of the federal states have already published corresponding decrees for this purpose on March 19, 2020.

The application for deferral should be substantiated accordingly and reference made to the causal circumstances of the Corona crisis. KBHT will be pleased to support you with the application process. In some cases, it may also be expedient to apply for a retroactive deferral in order to attempt to obtain the return of tax payments that have already been effected as additional liquidity.

The deferral is granted interest-free in most of the cases affected. As a precautionary measure, an application may also be made for the waiver of any deferral interest.
Please note that in the event of the (potential) subsequent insolvency of the company, the liability of the Managing Director for outstanding tax demands cannot be ruled out. The exact extent of the tax deferral should therefore be clarified in advance.

The Inland Revenue offices should also reduce advance tax payments quickly and in an uncomplicated manner. This applies to advance payments for income tax, corporation tax and trade tax. Here too, however, the pre-requisite is that the company is affected by the impacts of the Corona crisis. This must be substantiated accordingly.

In some procedures that we conduct, the Inland Revenue offices have also shown themselves to be accommodating in that – contrary to standard administrative practice – past advance payments that have already been effected (e.g. March 10, 2020) are also being refunded in exceptional cases. In special cases, when the liquidity situations are particularly difficult, this could also be used to generate additional liquidity.

If the general situation and the earnings situation improve again, it should not be forgotten that the advance payments need to be increased again on the basis of the current planning. You are legally obliged to do so.

For companies affected by the Corona crisis, enforcement measures (e.g. garnishment of bank accounts) or the setting of late payment penalties are to be waived until December 31, 2020. Of course it is advisable in affected cases that the Inland Revenue office be informed of the reasons for this and, if necessary, any applications for legal remedies to be submitted in good time.

The special VAT advance payment for 2020 should be reduced to €0 for 2020. This is not a nationwide arrangement. This arrangement currently applies to the federal states of North Rhine-Westphalia, Bavaria, Baden-Württemberg and Hesse.

Since the special advance payment for 2020 was already due, a corresponding change request is required. KBHT will support you with the application upon request.

In order to defer social security contributions, a corresponding deferral application has to be submitted to the health insurance company. It should be noted that a separate deferral application is required for each health insurance company concerned. For faster processing, the templates of the health insurance companies should be used.

KBHT is always available to assist you with your application.

According to the letter from the Federal Ministry of Finance dated April 24, 2020, employers may in individual cases extend the deadlines for submitting monthly or quarterly wage tax registrations during the Corona crisis upon written or electronic application, provided that they themselves or the individual who is responsible for wage accounting and wage tax registration can show that they are prevented through no fault of their own from submitting the wage tax registrations on time. The extension of the deadline may not exceed 2 months. Since the delayed submission of the wage tax registration also results in a correspondingly delayed payment of the wage tax, this results in a temporary improvement in liquidity for the employers.

KBHT can also assist you with the application process.

Taxpayers who are directly and not inconsiderably negatively affected by the Corona crisis and who have not yet been assessed for the 2019 assessment period may, as a matter of principle, can apply for a reduction of the fixed advance payments for 2019 until the end of March 2021 if they expect a tax loss for 2020.
The applications for a reduction of the advance payments for the 2019 assessment period should be dealt with in a simplified form for all parties involved on the basis of a flat-rate loss carry-back from 2020. This does not affect the possibility of providing evidence of a higher recoverable loss in individual cases by submitting detailed documentation.
a) Preconditions

  • The temporary loss carry-back applies only to sole proprietors and corporations with various types of profit income (agriculture and forestry, commercial operations, freelancers) or natural persons with income from renting and leasing. The receipt of any other income in addition to the above has no detrimental effect.
  • The reimbursement only relates to advance payments of income and corporation tax (including surcharge taxes), but not to trade tax.
  • The taxpayer must be directly and not inconsiderably affected by the Corona crisis. This is presumed to be the case if the advance payments for 2020 have been reduced to zero euros and the taxpayer submits an assurance that not inconsiderable negative income (i.e. losses) is expected due to the Corona crisis in 2020.

 b) Procedure

  • The flat-rate loss carry-back amounts to 15% of the profit income or rental income on which the calculation of the advance payments for 2019 was based.
  • The advance payments for 2019 are to be re-calculated and set by taking into account the flat-rate loss carry-back from 2020. This results in a corresponding claim for a refund.
  • Instead of the flat-rate loss carry-back of 15% of the income that is relevant for the 2019 advance payments, a higher loss carry-back can be applied for in individual cases by enclosing detailed documentation.
  • The maximum loss carry-back is EUR 1 million (EUR 2 million in the case of a joint assessment). For corporations, this results in a maximum inflow of liquidity of EUR 150,000 in corporation tax plus solidarity surcharge (EUR 1 million x 15% tax rate, plus solidarity surcharge) in the case of correspondingly high income. For business partnerships (sole proprietorships, non-incorporated firms), the liquidity effect depends on the personal tax rate.
  • The tax assessments for 2019 will probably be made during the course of 2020/2021. In cases of a flat-rate loss carry-back, these should then result in additional payments, as the final loss carry-back itself will only be applied within the context of the 2020 assessments (in 2021/2022). Therefore, the subsequent payments in this respect will be deferred on request without any interest being charged until the 2020 assessment has also been made. If this then results in a lower loss carry-back than the flat-rate – or even no loss carry-back at all – the deferred subsequent payments must be paid within one month.

KBHT will be pleased to support you with the application and, if necessary, the determination of a loss on which a carry-back is based that is higher than 15% of the income. Please feel free to contact us.

To strengthen domestic demand in Germany, the VAT rate will be reduced from 19% to 16% and the reduced VAT rate from 7% to 5%. These tax rate adjustments are limited to the 2nd half of 2020 for transactions carried out in the period from 1 July 2020 to 31 December 2020.

Principles of the Changes

Standard Tax Rate

  • The standard tax rate of 19% applies to all transactions carried out up to 30 June 2020.
  • A standard tax rate of 16% applies to all transactions carried out in the period from 1 July 2020 to 31 December 2020.
  • From 1 January 2021, the previous standard tax rate of 19% will then apply again (status as of today).

Reduced Tax Rate

  • The reduced tax rate of 7% applies to all transactions carried out up to 30 June 2020.
  • A reduced tax rate of 5% applies to all transactions carried out in the period from 1 July 2020 to 31 December 2020.
  • From 1 January 2021, the previous reduced tax rate of 7% is to apply again (status as of today).

When the new tax rates are applied, the time of performance of the service (for deliveries: start of transport/despatch. For other services: completion of the service, for work deliveries: the time of acceptance – if partial services are made: upon completion/partial acceptance of the respective partial service) is decisive in all cases. The time of commissioning the work, payment or invoicing is not relevant.

The adjustments also apply to import VAT. There are unlikely to be any adjustments to the average tax rates for agriculture and forestry (Section 24 of the VAT Act) and the flat-rate input tax (Sections 23, 23a of the VAT Act).

For companies this change will result in a considerable amount of work: New accounts or new tax keys should be created in Financial Accounting as early as possible so that the services performed from 1 July 2020 onwards can be recorded separately at the reduced tax rates. This may require changes to the ERP system as well as cash register programming (e.g. amended price lists). Standing direct debits and standing orders must be adjusted if the final price changes (especially in the case of net price agreements). The processes in Sales (order writing, purchase price clauses, agreement of partial acceptances and partial services), Accounts (invoicing, checking incoming invoices, booking of the new items) should be reviewed and the attention of the employees concerned drawn to the new situation accordingly, with training being offered if necessary. KBHT can provide you with support in such cases.

The tax loss carry-back will be extended - by law - for the years 2020 and 2021 to a maximum of €5 million and €10 million in the case of joint taxation (previously €1 million and €2 million in the case of joint taxation). A mechanism will be introduced to enable this carry-back to be used with immediate financial effect in the 2019 tax return, e.g. by creating a tax corona reserve. This already creates the necessary liquidity today and should be able to be managed with a minimum of bureaucracy. The reserve will be released by the end of 2022 at the latest. By increasing the volume of loss carry-back, higher tax savings can now be achieved in previous years. Detailed instructions for implementation are still pending. We will also provide you with information on this as soon as possible.

As a tax investment incentive, a degressive depreciation (AfA) with a factor of 2.5 compared to the currently applicable depreciation and a maximum of 25% per annum for movable fixed assets in the fiscal years 2020 and 2021 will be introduced. Conversely, no declining balance depreciation is planned for immovable assets such as buildings or intangible assets such as software.

The due date of the import turnover tax is postponed to the 26th of the following month. This ensures a positive liquidity effect for companies affected.

In order to improve the competitive conditions for companies, the corporate tax law is being modernised: among other things, an option model for corporate tax for partnerships (taxation of partnerships as well as corporations) and the increase of the reduction factor for income from business operations to four times the trade tax base (previously 3.8 times). Both measures may lead to a noticeable tax relief for the company. The option model is already being used in the United States, for example, and will lead to a significant increase in the flexibility of taxation. We will examine the applicability and contact you if necessary.

In the case of trade tax, the allowance for existing additions is increased to 200,000 € (previously 100,000 €).

Due to the higher care costs and the resulting expenses, the relief contribution for single parents will be increased from currently € 1,908 to € 4,000 for the years 2020 and 2021 for a limited period of 2 years, and thus more than doubled.

The tax research allowance is granted retroactively as of 1.1.2020 and limited until 31.12.2025 on an assessment basis of up to € 4 million per company. This provides an incentive for companies to invest in research and development and thus in the sustainability of their products despite the crisis.

The effects of the corona pandemic are increasing expenditure in all social security schemes. In order to prevent a resulting increase in non-wage labour costs, social security contributions will be stabilised at a maximum of 40% as part of a "Social Guarantee 2021", with any additional financial requirements being covered by the federal budget at least until 2021. This protects the net incomes of employees and brings reliability and competitiveness for employers.

Liquidity Support

A press conference was held on March 19, 2020 at 1:00 p.m. at the Düsseldorf State Chancellery with Minister President Armin Laschet, Minister of Economics Pinkwart and Finance Minister Lienenkämper. The background to this was the current Corona crisis and today's economic summit with leaders from politics, business, banks and trade unions.

The aim of the NRW state government is now to ensure the liquidity of companies and entrepreneurs during the pandemic and to make sure that the economy is well equipped for times after the pandemic. To this end, the so-called "NRW rescue package" was presented.

The "NRW rescue package" includes the following measures (highlights):


  • An NRW rescue package with a volume of €25 billion is to be passed in the state parliament on Tuesday, March 24, 2020.
  • The rescue package is intended to be available to companies in times of crisis and thereafter.
  • A supplementary budget for NRW is also to be adopted for this purpose on Tuesday, March 24, 2020. This supplementary budget requires the State of NRW to incur new debt.


  • In addition to the measures taken by the federal government, the special VAT advance payment for entrepreneurs in NRW is to be reduced to €0 for the year 2020. Since the special advance payment for 2020 was already due, a corresponding change request is required. KBHT will support you with the application upon request.


  • The guarantee framework of the NRW guarantee bank is to be massively increased from €900 million to €5 billion.
  • The exemption from liability is to be increased from 50% to up to 90%.
  • The processing time for the guarantees is to be reduced from 3 weeks to 1 week.
  • For guarantees up to €250k the processing should only take 3 days (express guarantees).
  • Since the 12th calendar week it has been possible to apply for guarantees through the house banks.
  • The State of NRW intends to make maximum use of the liability assumption.
  • The EU Commission has already approved the measures.

Start-Ups/Founders Scene

  • Private investors should be provided with financing offers.
  • The start-up grant is to be extended from 12 to 15 months.
  • The digitisation loans are to be increased.

Solo Self-Employed Individuals and Small Businesses

  • In addition to the federal subsidies, the State of NRW is planning to increase the subsidies for companies with 10 to 50 employees by up to €25,000. Reference is made to the above section.

If you have any questions regarding the above points or need assistance in applying for loans or guarantees, please do not hesitate to contact us.

In order to secure the liquidity of companies affected by the Corona crisis, it has been decided to significantly expand the existing KfW programmes for liquidity assistance. The measure relates to various measures both for young companies (under 5 years old) and existing companies (over 5 years old). However, a pre-condition for the granting of a loan is that the companies in question were healthy before the Corona crisis. The application is submitted via the house bank.

For companies that have temporarily run into more serious financing difficulties due to the crisis and therefore do not have easy access to the existing support programmes referred to above, additional special programmes for working capital and investments are to be set up for all corresponding companies at KfW. This will be made possible by increasing KfW's risk tolerance. For this purpose, the risk assumptions for investment funds (exemptions from liability) are to be significantly improved and will amount to up to 80% for working capital and even up to 90% for investments.

Within the framework of the special programme of the KfW-Bank, blank loans (i.e. without collateral) up to a rating of 11 (according to the savings bank rating) can be applied for. A rating of 12 or 13 requires 41% collateralisation of the total loan. As this must relate to companies that were considered healthy before the start of the crisis, the reference date for the purposes of the rating is December 31, 2019. The loan programmes of the KfW-Bank are fundamentally aimed at all enterprises.

Corresponding applications and further information can be called up on the homepage of the KfW.

According to the information provided to us, the following documents are required to prepare the loan commitment:

  • annual financial statements for 2018
  • provisional annual financial statements for 2019, alternatively the business assessment for 2019, incl. the list of totals/balances
  • brief description of the situation, explanation of the measures introduced
  • preliminary liquidity planning for 2020
  • profitability planning for 2020 (including crisis impact) and 2021 (if necessary, based on the years 2018/2019)

KBHT can support you at any time with the application process, as well as the compilation of all necessary financing documents.

The KfW Special Programme 2020, which was launched in response to the Corona crisis, is constantly being supplemented by new measures. The so-called KfW Quick Loan 2020 is the most recent innovation. The advantage of the Quick Loan is that the house banks do not take any risk of their own and no collateral has to be provided. With the other previously known KfW crisis loans, the house bank has a risk of 10% or 20% of the loan amount. On the other hand, the interest rate of the Quick Loan is approx. 3% higher than for the other loans (depending on creditworthiness between 1.00% and 2.12% p.a.).

Eligible Applicants

  • companies, sole proprietors and freelancers
  • NEW: regardless of number of employees
  • company headquarters in Germany.

Application Requirements

  • The business has been operating on the market at least since January 1, 2019
  • The business must have generated a total profit on average over the years 2017 to 2019
  • The company was not in difficulty as of December 31, 2019
  • The business is competitive over the long term
  • Investments as well as operating resources – including warehouses – are subsidised
  • application via the house bank is submitted by December 31, 2020


  • Exemption from liability of the house bank by the KfW or the Federal Government to the level of 100%
  • No provision of collateral necessary
  • Maximum loan amount of 25% of the annual turnover in 2019, limited to €500,000 (for companies with 11 to 49 employees) or 800,000 (for companies with 50 or more employees)
  • Term of up to 10 years, with a maximum of 2 redemption-free years
  • Fixed interest rate over the entire term

Special Features

  • Profit and dividend distributions (including those for which a resolution has already been passed) are not permitted as a matter of principle during the term of the loan
  • The Managing Director's remuneration (including variable salary components as well as non-cash benefits such as the use of a car) may not exceed the amount of €150,000 p.a. per Managing Director during the term of the loan
  • No debt re-scheduling or redemption of existing credit lines with the help of the KfW Quick Loan
  • No support for supplementary financing or follow-up financing of already completed projects or financial investments
  • No possibility of combining with other financial support programmes

In spite of the assumption of liability by the KfW, your house bank might request additional documents such as annual financial statements, business assessments or liquidity plans when granting a loan. KBHT will be pleased to assist you in compiling or preparing the necessary documents. Please contact us if necessary.

The Bürgschaftsbank NRW (North Rhine-Westphalia Guarantee Bank) secures loans of up to EUR 2.5 million if a company (SME) wants to have operating resources or investments secured as a result of the Corona crisis and had a viable business model before the crisis.

The guarantee level can be up to 80%, so that the house bank still has to assume a credit risk of 20%.

The guarantee commitment is to be made within 3 days with a maximum guaranteed amount of up to EUR 200,000 ("express guarantee").

The above-mentioned financing documents (annual financial statements for 2018, provisional financial statements or business assessment for 2019, liquidity and profitability planning) are also required for the application.

Further information can be found here:

A link to the funding database, which provides an overview of funding programmes of the Federal Government, the German States and the European Union, can be found below. Under the keyword "Corona" you will find current funding programmes using the search function (

Founders of new businesses and SMEs can receive up to EUR 75,000 in capital through the micro-mezzanine fund to strengthen their liquidity. No collateral needs to be provided for this. The mezzanine capital is provided to the company via a typical silent partnership of Kapitalbeteiligungsgesellschaft NRW (NRW Capital Investment Company).

Financing is provided for investments and working capital (no redemption of existing bank loans). Combination with bank financing/guarantees from the Bürgschaftsbank NRW (Guarantee Bank) is possible.

Both start-ups and SMEs can apply for mezzanine capital from the Kapitalbeteiligungsgesellschaft NRW in Neuss:

The application does not have to be made through the house bank.

If applying for mezzanine capital is an option for you and you need assistance with the application, we will be pleased to provide you with support.

Effects of Coronavirus on Remuneration - Information for Employers (March 2020)

  • The employee suffering from the coronavirus is entitled to continued remuneration in the case of illness for a period of six weeks [Section 3 EFZG (Continued Payment of Remuneration Act)]. After this period, people with statutory health insurance are entitled to sickness benefit.
  • If quarantine is ordered at the same time, the claim for continued remuneration competes with the claim for compensation under Section 56 InfSchG (Infection Protection Act). Here, the employer makes advance payments in the form of continued remuneration and can submit an application for reimbursement of the amounts paid out to the Landschaftsverband (Regional Council) (in NRW Landschaftsverband Rheinland or Westfalen-Lippe). The application must be submitted within 3 months after cessation of work or after the end of quarantine. You will find a sample application form from the Rhineland Regional Council in the appendix.
  • The health authority can ask the affected person to provide a list of contacts (people with whom they have had contact). The health authority may order that these contacts remain in quarantine. The health authority will also decide whether contacts should be tested.
  • Contacts in quarantine are entitled to claim compensation equal to the loss of earnings. For employees this is provided by the employer for a maximum of 6 weeks. The employer can have this compensation payment reimbursed by the Landschaftsverband (Regional Council) under Section 56 IfSG (Infection Protection Act). The application must be submitted within 3 months after cessation of work or after the end of quarantine.
  • From week 7 onwards, the employee applies for compensation to the Landschaftsverband himself and receives it directly from this office. The compensation from the 7th week corresponds to the amount of statutory sickness benefit under Section 47 (1) SGB V (German Social Code V).
  • The employer can demand an advance payment for remuneration from the Landschaftsverband (Section 56 (12) IfSG).
  • The employee should be sent home.
  • Employers outside the healthcare and food sectors cannot order employees to undergo medical treatment, including a test.
  • In this case, regular remuneration is initially to be continued. If quarantine is ordered and/or the suspicion is confirmed, the employer can submit an application for reimbursement to the Landschaftsverband.
  • Healthy employees continue to work as usual. If employers release healthy employees, they are obliged to pay these employees a default salary because they will not accept the offered performance of work by the employees.
  • It can be mutually agreed that working from home is appropriate. In this case, only the location of the provision of services changes and all other obligations remain unchanged.
  • The employee must arrange for the care of his child himself. He is still obliged to perform his work.
  • Employers must only release their employees if they or their young children are ill or quarantined.
  • For parents who work in indispensable functional areas - especially in the health sector - daycare centres and schools should offer childcare (up to grade 6).
  • No, because in this case the employees are absent without authorisation if there is no agreement with the employer to work from home, for example.
  • The unauthorised absence can be subject to a warning. In the case of recurrence, termination is also possible.
  • If, at the employee's request, the employer and employee mutually agree that the employee will be absent and will not work from home, the absence will be subject to the reduction of holiday entitlements or, if applicable, alternative time credits.
  • Employees are not entitled to work from home. If employees stay at home without agreement, this is a breach of their obligation to work. There is no entitlement to continued remuneration.
  • Conversely, employers may not unilaterally order work from home either.
  • Employers and employees should mutually agree on working from home.

In this case, short-time working must first be agreed with the employees (if necessary, enforced with change notices) and registered with the Employment Agency.

On March 16, 2020, the German federal government eased the conditions for receiving the short-time working allowance:

  • It is sufficient if 10 percent of a company's employees are affected by loss of working hours for a company to apply for short-time work. Otherwise, at least one third of the employees must be affected.
  • Social security contributions are fully reimbursed by the Federal Employment Agency in the event of short-time work.
  • The short-time working allowance is also possible for employees in temporary employment.
  • In companies where agreements on fluctuations in working hours are used, no negative working time accounts are created.

In addition, self-employed persons and entrepreneurs who are affected by a measure under the Infection Protection Act are entitled to compensation for ongoing uncovered business expenses under Section 56 (4) of the Infection Protection Act if their livelihood is threatened. Here too, the time limit of 3 months after completion of the measure applies.

A substantiation of the coordination and interlinking of measures to support entrepreneurs in the current situation can still be expected. We will keep you informed.

Further information can be found on the following pages, among others:

Federal Ministry of Labour and Social Affairs:

Robert Koch Institute:

Local health authorities:

Short Time Work Unemployment Benefit


Temporary reduction of normal working hours with a corresponding reduction in remuneration


  • The imposition of short-time working by the employer is only possible on a corresponding legal basis,
  • by law, a collective agreement, works agreement, employment contract or separate agreement with the employee,
  • the order of precedence of legal provisions must be considered: Reference is made to the applicable collective agreement. Otherwise, the order of precedence according to works agreements and separate agreements applies. If none of the contractual agreements exist, an individual agreement must be concluded with the employee. We will be pleased to provide you with the corresponding template.


  • Right of initiative: The works council can apply for the introduction of short-time working from the employer and, if necessary, force it through the conciliation committee.
  • Right of co-determination in the case of the early termination of short-time working by the employer.
  • No right of co-determination on remuneration issues: the works council is not entitled to make its approval of the introduction of shorttime working dependent on the granting of short time work unemployment benefit by the Employment Office.


  • Introduction of short-time working regardless of the right of co-determination.
  • However, the employer then has to conclude a corresponding individual employment agreement with each employee; if employees do not agree to this, dismissal with the option of altered conditions of employment must be issued – at least in theory. Please contact us in this case, as the legal implications have to be examined for each employee on an individual contract basis.


Employee's entitlement to compensation for loss of the claim to remuneration


Short time work unemployment benefit is granted if the conditions specified in Sections 95 to 99 of Book III of the German Social Code are satisfied.

economic causes

  • economic causes are all influences that arise directly or indirectly from the economic process and result in a change to the operational structure

unavoidable occurrences

  • unavoidable occurrences are exceptional circumstances in the working environment which are officially imposed on the one hand, and result from force majeure on the other

temporary nature

  • this is of a temporary nature when the transition from the actual state to the target state can be expected with a certain level of probability.
  • Such an occurrence includes, for example, delivery failures or plant closures due to protective measures imposed by the state.

operational preconditions (Section 97, Book III of the German Social Code)

  • Short time work unemployment benefit is only permitted in companies where there is at least one employee. Such failures can also affect only one department of a company, for example

personal requirements (Section 98, Book III of the German Social Code)

  • The employment is continued as employment which is subject to social insurance contributions after work stoppages
  • The employment relationship is not terminated or subject to a cancellation agreement

are fulfilled and

  • notification of the work stoppage is reported (Section 99 of Book III of the German Social Code)
  • in writing to the Employment Agency in whose district the company is located
  • plus a statement of the company representative on the work stoppage (loss of working hours). It remains to be seen to what extent the Employment Office needs information. For plant closures which are officially imposed it should be possible to reduce this to a minimum.
    Search for an administrative office via the Federal Employment Agency:
  • Signed notification sent by email or fax satisfies the legal requirements. Alternatively, it is possible to register on the Internet portal of the Federal Employment Agency and submit the application online.
  • Reference is made to the Federal Employment Agency application:
  • The application must be accompanied accordingly by the documents relating to the works agreement or the individual contractual agreements with the employee.
  • The ongoing application is made in the form of an application for benefit, which is usually prepared by us within the framework of the payroll accounting system. The application must then be forwarded to the Employment Agency responsible after it has been signed. The follow-up period for the current monthly application is 3 months. After that, the claim to short time work unemployment benefit expires without replacement.
  • The employee must use up his or her holiday entitlement (which is also based on overtime) before claiming short-time working. This can only be avoided if there is a complete annual holiday plan for each individual employee.
  • Priority must always be given to using up existing overtime or credit from the working time account. Using up working time credit can be demanded from the employee pursuant to Section 96 IV, Subsection 4, Sentence 2 of Book III of the German Social Code only in the following cases:
    o where it is contractually stipulated to be intended exclusively for the bridging of work stoppages outside bad weather periods (Section 101, Subsection 1) and does not exceed 50 hours,
    o where it is intended exclusively for the purposes specified in Section 7c, Subsection 1 of Book 4 (family care, parental leave, reduction of the working time on the basis of Section 8 or Section 9a of the Part-Time and Fixed-Term Contracts Act),
    o has been saved to avoid the availment of seasonal short-time working unemployment benefit and does not exceed 150 hours,
    o exceeds 10 per cent of the annual working time of an employee without overtime or
    o has existed unchanged for more than one year.
  • The company must show in a credible manner that the loss of working hours is unavoidable and cannot be prevented by working time arrangements that are permitted at the company
  • During the period covered by the short time work unemployment benefit, the company must make a sustained effort to reduce or bring to an end the work stoppage
  • The minimum requirements for determining a work stoppage are stipulated in Section 96, Subsection 1, Part 4 of Book III of the German Social Code. We will certainly have to support the client in verifying the loss of working hours.
  • The employment agency can demand that recipients of short time work unemployment benefit conclude other reasonable employment contracts. In the event that the employee refuses to do so without good reason, the provisions applicable to unemployment benefit shall apply (cf. unemployment benefit blocking period).
  • In the case of absence due to illness, only the reduced remuneration shall be payable.
  • In the case of absence due to a holiday, the full remuneration is to be paid without any reduction due to the short time work unemployment benefit.

Reference is made to the changes introduced by the Federal Government on March 12, 2020:

  • If orders are not received due to difficult economic developments, a company can apply for short-time working if at least 10 per cent of the employees have a loss of earnings of at least 10 per cent. This threshold has been the case up to now for 30 per cent of the workforce.
  • Temporary employees will also be able to draw short time work unemployment benefit in the future, to which they have an entitlement.
  • Social security contributions for lost working hours are reimbursed to the level of 100 per cent.
  • The regulation is currently limited to December 31, 2021.


Short time work unemployment benefit is paid at a company at the earliest from the calendar month in which the notification of the loss of work is received by the Federal Employment Agency (Section 99, Subsection 2 of Book III of the German Social Code).

If an application for short time work unemployment benefit therefore still to be submitted for the month of March, the notification of loss of working hours would have to be submitted to the agency responsible by March 31, 2020 at the latest. We will be pleased to support you in preparing this. Please contact us in good time.


  • Normally 12 months
  • In the case of exceptional circumstances on the overall labour market, the Federal Ministry of Economics and Labour may, by means of a statutory order, extend the period of entitlement to up to 24 months.
  • No such special regulation currently exists.
  • 67% of the net pay difference in the entitlement period (for employees with children) or 60% (for those without children)
  • From the 4th month: 77% of the net pay difference in the entitlement period (for employees with children) or 70% (for those without children)
  • From the 7th month: 87% of the net pay difference in the entitlement period (for employees with children) or 80% (for those without children)
  • The employer can top up the short-time work unemployment benefit to a certain extent without social security contributions (the obligation to pay wage tax remains unaffected). Please talk to us about this.
  • Net pay difference: The difference between the flat-rate net remuneration from the target remuneration (what the employee would have earned without the loss of work, less remuneration for additional working during the entitlement period) and the flat-rate net remuneration from the actual remuneration (the gross remuneration actually earned by the employee during the entitlement period)


The contents of this website were created with due care. Information, especially in the current situation surrounding covid-19, may change by the hour. Therefore we cannot guarantee that the information provided is at all times current, correct or complete. All contents of this page are created solely for your information and due not pose as consultation. They do not replace individual consultation considering the particular circumstances of the individual case. The representation of information does not constitute any relationship pertaining to mandate and/or liability.