The German government will alleviate the fiscal pressure on the restoration so that the sector, one of the most damaged by the coronavirus crisis, can face with tax cuts the return to normality with prospects for growth and maintenance of employment.
The draft Tax Assistance Law approved today by the Council of Ministers foresees a reduction of the value added tax (VAT) on meals from the current 19% to 7% . The objective is to support the sector in the reopening period and to alleviate the economic effects of the restrictions still in force. "Bars and restaurants will need a boost when they can reopen," said Secretary of State for Finance Sarah Ryglewski.
At the same time, the cabinet decided that employers' grants for short-term labor benefits are largely tax-exempt. The prerequisite is that the replacement amount and short-term allowance together do not exceed 80% of lost wages. If more is paid, only the part that goes further will be taxed. This corresponds to the regulation in the social security law and ensures that payments reach employees without decrease.
The Ministry of Finance calculates that these measures will suppose up to 2,700 million euros less in the collection of the State.
The rule will take effect on July 1, 2020 and will last until June 30, 2021, once it is approved by the two parliamentary chambers.
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