COVID-19 – Measures Of The German Federal Government, The Federal States And The European Union

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Every day, we receive new information on measures taken by the German Federal Government, the Federal States, the European Union and its institutions.
Germany Finance and Banking

Every day, we receive new information on measures taken by the German Federal Government, the Federal States, the European Union and its institutions. The clear, common goal is to cushion the effects of the corona-pandemic on the German and European economy. On 13 March 2020, both the German Federal Government and the European Commission presented in this regard comprehensive packages of measures to cushion the effects of the corona-virus.

The German Government's package of measures includes in particular the flexibilization of short-time work compensation, tax liquidity aid, a billion-euro shield for businesses and companies and the strengthening of European cohesion. In a summary proceeding, the German Parliament has already passed the Act on the temporary crisis-related improvement of the regulations for short-time work compensation, according to which the German Federal Government was authorized to lower the requirements for receiving short-time work compensation until 31 December 2021. A wide range of measures have also already been implemented to provide companies with liquidity. For example, the conditions for the KfW-Unternehmerkredit and ERP Gründerkredit – Universell were relaxed, turnover limits were raised, etc. Additional special programs are also to be made available at KfW. These are currently still in preparation and are also subject to approval by the European Commission. Other measures, such as the suspension of the obligation to file for insolvency, are also in preparation.

The Federal States have not remained inactive either. While, for example, a Bavarian protective shield has already been set up in Bavaria, other Federal States have also implemented extensive measures, such as the expansion of existing financing programs, facilitations, exceptions to driving bans on Sundays and public holidays, etc. In many cases, tax measures were also implemented, such as the (interest-free) deferral of tax liabilities, the adjustment of prepayments and the waiver of enforcement measures and late payment surcharges. Further measures are currently still in preparation.

These measures of the Federation and the States are accompanied by European measures. For example, the European Commission has announced the following measures:

  • Liquidity measures: 1 billion euros is to be provided from the EU budget as a guarantee for the European Investment Fund to encourage banks to grant loans to small and medium-sized enterprises and mid-cap companies;
  • Coronavirus Response Investment Initiative: an initiative to enable Member States to have sufficient sources of funding to combat the corona-crisis;
  • Flexibilization of the aid scheme: In addition to the implementation of procedural simplifications, the classification of the corona outbreak as an "exceptional occurrence" makes it possible to authorize aid to compensate undertakings for damage caused by the corona-outbreak;
  • Flexibilization of the financial framework of the EU: When assessing compliance with EU financial rules, one-off fiscal measures taken to offset the economic impact of Corona shall not be taken into account.

The European Central Bank has also presented a comprehensive package, in particular the "Pandemic Emergency Purchase Program (PEPP)" with a volume of 750 billion euros. This is a temporary program for the purchase of government and private securities until the end of the year.

Particularly in view of the measures and programs of the German Federal Government, the Federal States and the European Union, many of which are still in preparation, this is currently a very dynamic area, which almost daily brings with it further opportunities for companies affected by the corona crisis. We are happy to provide you with an overview on the measures taken by the German Federal Government, the Federal States and the European Union.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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