Hands-on experience: Questions & Answers on deferral and reduction requests
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Hands-on experience: Questions & Answers on deferral and reduction requests

As an aid in the Corona crisis, companies have had the option to apply for deferral and reduction for two weeks now. We recommended that our clients make use of this option. Now, together with our clients, we have gained hands-on experience in filing applications. We provide questions and answers on deferral and reduction applications.

How attractive are deferral and reduction applications for companies?

In a very large number of cases, applications were made for reductions of advance tax payments – also retroactively for advance payments already made. In such cases, the tax offices have even already refunded the amounts. Deferrals of due taxes may also be interesting. However, clients often worry that the liabilities are piling up too high and are more cautious and critical of deferrals.

Were the requests for deferment and reduction granted?

In most cases, the requests were granted. In a few cases, the tax authorities raised questions, which were also granted after an explanation of the situation.

In what specific cases were the requests not granted?

In our experience to today, there have been few exceptions, in which the application was denied. For example in the case of a software developing company sector, fiscal authorities felt the that the company is not affected by the crisis.
We had similar experiences with applications submitted by investment companies. These were also classified as not being affected by the crisis.

What are the experiences with the cooperation of the tax offices?

The workload of the tax offices has different effects. Feedback in some cases is given very quickly and there is great understanding for the situation of taxpayers. Other tax offices do not respond at all.
However there is a clear positive development: some tax offices replied within a few hours and, in contrast to correspondence by post, made communication much quicker and easier by e-mail.

What is the experience with electronically submitted applications?

Especially with electronically submitted applications, the application process runs smoothly. Here, tax offices react fast. This shows once again the added value of digitization of the authorities – not only in times of crisis.

Our assessment

After the first experiences we made last week, we continue to consider the suspension and deferral applications to be a suitable means of keeping liquidity with the entrepreneur.
We therefore continue to recommend our clients to consider this option. We will be happy to assist you in the review and application process.

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