Recording corona support in your accounting
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Recording corona support in your accounting

The various aid measures have relieved many entrepreneurs during the Corona crisis. But how do these have to be recorded in the accounts? We will explain how to enter corona aids in your accounts in case you prepare your own accounting.

The measures taken by the federal and state governments were manifold. We offer you an overview of how to enter the respective Corona aids in your accounting.

Entering emergency aid in your accounting

The emergency aid is a genuine grant. This means that companies have no repayment obligation and there is no mutual benefit between companies and the authority.

You must therefore enter the immediate aid directly in the income statement. It should appear in the profit and loss account as „other operating income“. The emergency aid is taxable in any case.

We recommend that you post the immediate aid paid out to the financial accounting account #2709 (DATEV chart of accounts SKR03) or #4839 (DATEV-SKR04) „Other income irregular“.

Enter the decrease of advanced tax payments in accounting

You post your paid advanced tax payments in the amount of the reduced payment amount.

You do not need to take any special particularities into account. If the advance payment was reduced to zero, no posting is made.

Entering deferral of tax payments in your accounting

You must always post your expenses for tax payments in full.

The deferral represents a liability towards the tax authorities. This liability must appear as „other liability“ on the liabilities side of your balance sheet.

By posting the deferral as a payable, you can see the amount of the deferred and thus accrued liabilities directly from your accounting.

Entering the deferral of rent and lease payments in your accounting

The deferral of rental and lease payments does not lead to a reduction of your expenses.

You must therefore continue to list the expenses for this in full under the item „Other operating expenses“.

Any amounts not paid are shown as liabilities under the balance sheet item „trade payables“.

Recording short-time work compensation in the accounts

The German Institute of Auditors (IDW – Institut der Wirtschaftsprüfer) proposes for the annual financial statements under commercial law and those prepared in accordance with the International Financial Reporting Standards (IFRS) to recognise the reimbursement of short-time work compensation by the Federal Agency without affecting income. It is of the opinion that it should be considered a transitory item, as the employer, as trustee, only handles the payment. In accordance with the monthly payments made to the employees, a claim against the Federal Employment Agency should be capitalized. Payments from the employment agency will offset this receivable.

In the opinion of the IDW, the reimbursement of the social security contributions which are borne solely by the employer can be recorded as other operating income or as a reduction in personnel expenses.

It should be noted that DATEV’s account assignment instructions and account allocations in SKR 03 and 04 provide for the reimbursement of short-time work compensation to be reported under other operating income and thus deviate from IDW’s view.

In our opinion, there is no reason not to recognize the reimbursement in current accounting with an effect on income. You can also decide at a later stage and, if necessary, in consultation with the auditor, on the disclosure within the framework of the annual financial statements 2020 prepared in accordance with commercial law or under international regulations. For this purpose, the amounts recorded on a regular basis should be documented accordingly so that they can be transferred at year-end.

In addition: How do I record costs for protection and hygiene measures in the accounts?

Of course, protection and hygiene measures taken by companies during the Corona crisis are not state aid. Nevertheless, in many companies the question of the correct accounting of these expenses arises.

Costs for protection and hygiene measures are generally regarded as business costs. Record these ongoing operating costs under „other operating expenses“.

Expenses for the purchase of capital goods, installations and conversions or similar are considered as fixed assets. Therefore, you must depreciate these acquisition costs over the normal useful life.

In doing so, you should please keep in mind the regulations for low-value assets (GWG).

We will continue to supplement and expand these practical aids in the future. We will keep you up to date on this and will be happy to answer any questions you may have.

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Steuerberater in Düsseldorf and Köln, Wilhelm Kollenbroich
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