If there’s one thing you don’t need at this time of high energy costs, disrupted supply chains and growing existential needs, then it’s warnings, threats and harassing letters from the tax office. The top heads of the tax authorities, the finance ministers of the federal and state governments, have now come to this conclusion: they want to instruct the offices this week to treat companies, freelancers and the self-employed as leniently as possible in the coming months and to act in the event of omissions to refrain from overly harsh sanctions. This is what it says in a letter from the Federal Ministry of Finance, which is to be published shortly Süddeutsche Zeitung present.
Accordingly, the tax authorities should be able to take “equity measures” if companies are “not insignificantly negatively economically affected” by the “serious consequences” of the Russian attack on Ukraine. What is meant is: If a company cannot make its advance payments for income or corporation tax on time, the authorities can reduce the amount or defer the amount and refrain from forced collection via bailiffs or seizure of an account. A retroactive reduction in advance payments for the whole of 2022 is also possible. However, the prerequisite is that those affected have paid their taxes on time in the past, whereby deferrals granted as a result of the Corona crisis are not taken into account.
Unlike ordinary employees, companies, the self-employed and freelancers have to pay their estimated tax liability in the form of regular advance payments. The amount of this payment is based on the earnings of previous years. In the worst case, it can happen that a company has to transfer a considerable amount of taxes to the tax office every quarter, although it is currently not posting any profits or is even in the red due to high energy prices or pandemic-related production losses. The state would thus increase the existential crisis of the company. According to the responsible employers’ association BAVC, every second company in the chemical industry, which is particularly energy-intensive, is on the verge of going out of business if nothing changes in the high energy prices.
Companies that fear getting into trouble should in future be able to apply to the tax office for their payments to be temporarily reduced or completely suspended. In addition, the state wants to waive deferral interest. If the application is received by March 31, 2023, a large part of the evidence with which companies would otherwise have to substantiate their need should be omitted. In addition, the deadlines for submitting tax returns for the years 2020 to 2024 will be extended.
The letter promises that any requests to defer or adjust prepayments will be answered “in a timely manner.” However, it remains to be seen whether this will succeed, because at the same time the following also applies: “In each individual case, taking into account the facts relevant to the decision, a decision must be made at due discretion as to the extent to which the prerequisites for a tax equity measure are met.”