Tax offices should be generous in a crisis

Federal Finance Minister Christian Lindner

Together with his country colleagues, Lindner instructs the tax authorities to be generous in the energy crisis.

(Photo: REUTERS)

Berlin Many companies, the self-employed and freelancers are in acute financial distress because of the sharp increase in energy costs. Federal Minister of Finance Christian Lindner (FDP) and his country colleagues now want to provide some relief. They instruct the tax authorities to be as generous as possible when payments are due. Instead of reminders, there should be deferrals.

This emerges from a letter from the Federal Ministry of Finance (BMF) to the top financial authorities of the federal states, which was sent on Thursday. The so-called BMF letter with the subject “Taking into account the increased energy costs as a result of Russia’s war of aggression against Ukraine” is available to the Handelsblatt.

According to the paper, the consequences of the war and the sanctions are “serious” for the population and companies. The tax offices should “take appropriate account of this” for taxpayers who are significantly affected by the increased energy costs. The tax offices are entitled to “a series of equity measures”.

Liquidity should be secured

In plain language: the federal and state governments instruct the tax offices to make use of their leeway and to accommodate taxpayers who have economic problems as much as possible. Examples include the “reduction of advance payments for income or corporation tax” and the “deferral” of tax payments due.

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Entrepreneurs, the self-employed and freelancers often have to make advance payments to the tax authorities, which are based on the profit of the previous year. Due to the increased energy costs, the economic situation is now completely different for many. Therefore, the advance payments should be reduced if necessary. In addition, a deferral of tax debts is possible. Both help companies and the self-employed to secure liquidity.

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In order to benefit from such a measure, an application to the tax office is necessary. The tax officials then decide on a case-by-case basis. “The tax offices responsibly use the discretion available to them,” reads the request in the letter from the Federal Ministry of Finance. In the case of applications for lower advance payments, “no strict requirements are to be imposed” until March 2023.

Tax revenues just shift

It should also be possible to “suspend enforcement measures upon request”. “In individual cases, the charging of deferral interest can be waived for reasons of equity,” writes the Federal Ministry of Finance. The prerequisite in each case is that the taxpayer “is not inconsiderably negatively affected economically” by the energy price increases and that he “has so far met his tax obligations, in particular his payment obligations, on time”.

Even during the corona crisis, the federal and state governments had opted for tax deferrals and lower advance payments. These measures are seen as a means of quickly relieving companies and the self-employed.

For the Treasury, the measures are not associated with major revenue losses because the payments are only postponed. With the energy crisis and lower profits, tax revenues will fall anyway.

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