Germany Update: Pandemic Support for Businesses Extended

Germany Update: Pandemic Support for Businesses Extended

Covid-19 support schemes for businesses and short-term work allowances have been extended, learn more about the extensions here.

In early June 2021, Germany’s government announced that it would be extending financial support available to businesses that have been affected by Covid-19 lockdown restrictions. German businesses have collectively received over €105 billion since the start of the pandemic but with a potential third wave of infections on the horizon, Finance Minister, Olaf Scholz, emphasized the need to continue to offer support: ““Even if falling contagion rates offer hope that the pandemic will end, many companies continue to be affected by the consequences of the pandemic.”

Extended Support Eligibility

Under the new measures, businesses in Germany will be able to access financial support until the end of September 2021. Previously, the measures had been scheduled to expire on 30 June 2021.

The extended measures, known as ‘Temporary Support III Plus’, are intended for businesses that have been severely affected by the coronavirus pandemic. Accordingly, employers that apply for financial support under the new rules will have to demonstrate that their revenue has fallen significantly as a result of lockdown and associated public health restrictions.

Economy Minister, Peter Altmaier, stated that the Covid-19 aid is being extended so that German businesses can get back up to operational effectiveness as soon as restrictions are lifted. In a press statement, the minister commented: “This is an important signal so that all companies can get going again quickly after the crisis.”

Support for Short-Term Work Allowances

In addition to the extended business support, Germany’s Chancellor, Angela Merkel, announced an extension to the existing short-term work allowance scheme to 30 September 2021. The short-term work allowance scheme enables German businesses to reduce the regular hours of their employees without making lay-offs: employee wages are instead subsidised up to 60% by the Federal Employment Agency (employees with children are subsidised up to 67%). By keeping short term workers on their company payrolls, the short-term work allowance is designed to prevent shocks to Germany’s financial system as a result of sudden spikes in unemployment as lockdown measures are introduced. The German government has allocated €32 billion to fund the extended short-term work allowance scheme.

To learn more about support for businesses in Germany and around the world during the Covid-19 crisis, check out our latest news page. If you are interested in doing business in Germany, find out everything you need to know about payroll, tax, social security, employee benefits, work permits, employment law and more in the activpayroll Guide to Doing Business in Germany. This is available as a free PDF to download.