New Legislations in Response to the Coronavirus Pandemic in Germany

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Overview


Continued Payment of Salary for Parents

The German federal government has decided to extend the continued payment of salary for parents while there are still daycare and school closures. According to the proposed legislation, which is to amend the infection protection law accordingly, parents will now be entitled to continued payment of salary for up to 10 weeks per custodian. For single parents, the entitlement will be extended to 20 weeks.

The entitlement to continued payment of salary does not have to be claimed all at once. In accordance with the opening of schools and daycare centres on a daily basis, the continued payment of salary can also be claimed on a daily basis. In this case, the payment period is extended by the number of days not taken up. The extent and conditions of the entitlement to continued payment of salary remain the same. Parents are reimbursed 67% of their net income (up to 2016 euros) if they suffer a loss of earnings due to having to look after their children who are under the age of 12, are disabled or who need assistance, due to the closure of daycare centres or schools for lack of other care facilities. As previously, parents must have exhausted all other possibilities for organising childcare, such as reducing accumulated time credits. Payment is initially made by the employer, who in turn can apply for reimbursement from the relevant authority. In many federal states, the reimbursement application can now be submitted online at https://ifsg-online.de/index.html.

The new regulation now needs to be passed by the German Federal Parliament (Bundestag) and Federal Council (Bundesrat). It is still open whether it will also apply retroactively; a formulation aid from the Ministry of Family Affairs provided for its validity since the end of March 2020.

Planned Economic Stimulus Package

Currently, there is a controversial discussion about the content of an economic stimulus package that the German government wants to launch after Pentecost. The scope of the economic stimulus package has not yet been determined. The components under discussion are in particular a child bonus, whereby families are to receive a one-off payment of 300 euros per child, and a purchase premium for new cars to promote the automotive industry. According to Peter Altmaier, the Minister of Economics (Bundesminister für Wirtschaft und Energie), medium-sized companies will be able to receive up to 50,000 euros per month from June to December as subsidies if their sales in April and May of this year have dropped by at least 60% compared to last year. The SPD is also demanding tax cuts: The solidarity surcharge is to be partially abolished as early as July. Tax cuts for companies by means of more favourable possibilities for offsetting past or future profits against the losses suffered as a result of the Coronavirus pandemic are also being discussed. The Federal Minister of Finance (Bundesfinanzminister) Olaf Scholz, however, is advocating the support of municipalities by compensating for trade tax losses and taking over old debts. Consumer vouchers for local purchases have also been discussed, but are viewed rather critically by the government parties. Details of the economic stimulus package will be announced by the federal government after Pentecost.