Coronavirus - Update to Kurzarbeitergeld allowance

by ZELLER & SEYFERT

What has changed?

Over the past 24 hours, the German government have made significant changes to both the benefits available to employees who have had their hours reduced and the taxation levels within the service industry. With the economy grinding to a halt as a result of the Coronavirus crisis, The Grand Coalition (The governing alliance comprised of the CDU, CSU and the SPD) last night agreed an estimated 10 Billion Euro increase in spending, mainly to assist employees claiming Kurzarbeitergeld and to provide tax relief for the beleaguered gastronomy sector.

Changes to Kurzarbeitergeld

In a move which assists employers and employees alike, the German government will temporarily increase the level of monetary entitlement to workers on short term allowance. These increases will depend on the amount of time the employee has claimed Kurzarbeitergeld, with the percentage of the net wage increasing in blocks of time. The level of cover will from the 1st May be as follows:

  • Claiming Kurzarbeitergeld for 1-3 months, the level of compensation shall be:
    • 60% of the net wage for employees without children living with them.
    • 67% of the net wage for employees with children living with them.
  • Claiming Kurzarbeitergeld for 3-6 months, the level of compensation shall be:
    • 70% of the net wage for employees without children living with them.
    • 77% of the net wage for employees with children living with them.
  • Claiming Kurzarbeitergeld for 7 months onwards, the level of compensation shall be:
    • 80% of the net wage for employees without children living with them.
    • 87% of the net wage for employees with children living with them.

This move is not only a welcome increase to employees struggling to pay their bills, it also reduces the pressure on business’ struggling to meet payroll. The hope is that, with the state taking on a greater part of the financial burden, this will encourage employers to retain their employees, as opposed to terminating their employment.

This increase in benefits is set to expire and revert back to the original amount on the 31st December 2020 but, should the Coronavirus lockdown continue further into the year, this timeframe is likely to be extended.

Read more on Kurzarbeitergeld here. Should you have any questions in relation to your Kurzarbeitergeld entitlement, had any issues relating to it or feel that your employer may be taking advantage of the situation, we offer a free, 10 minute “Coronavirus consultation”. Our Employment Law expert Atty Dr. Christian Zeller has many years of experience in matters relating to Kurzarbeitergeld and we would welcome the opportunity to fight your corner.

Tax relief for the Gastronomy sector

The Gastronomy sector has been one of hardest hit sectors during the Coronavirus crisis, with restaurants, bars and cafes having had their incomes slashed due to forced closures and opening limitations to encourage social distancing. To mitigate, the German government has approved the reduction in VAT for meals from 19% to 7%. This reduction will come into effect from July 1st and will run for one year before reverting to the original rate.

The hope is that this reduction in tax should both reduce prices, therefore encouraging more people to eat out or takeaway when restrictions have been lifted or lessened, and reduce the overall tax amount due to the government at the end of the tax year.

Subsidies for digital learning

Many schools remain closed or with reduced hours of participation. The government have moved to encourage the use of digital learning by making 500 million euros available, to improve both the infrastructure and technology in this area. A 150 Euro subsidy will be available to those in financial need, to assist in the purchasing of suitable equipment.

 

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