Commission opens up scope for State aid
Social security contributions also to be deferred for most affected sectors of the economy.
SW – 04/2020
On 19 March 2020, the European Commission adopted its initial Temporary
Framework for State aid to support the economy in the current COVID-19 outbreak. The aim is to give Member States greater flexibility in the State
aid rules in order to
provide companies with sufficient
liquidity in the form of direct grants, subsidised interest rates on loans and guarantees so that they can maintain
their economic activity during the crisis.
Expanded Temporary Framework
The European Commission has now expanded this Temporary Framework with an additional five
measures, which further
increases the leeway afforded the Member States. The Amendment to the Temporary Framework adopted on 3 April 2020 now
allows Member States to provide targeted support by deferring social contributions for
the sectors, regions and types of businesses most affected by the outbreak.
Member States could already implement measures to support all companies in accordance
with the State aid rules in force, including suspending social contributions. The EU Commission had already pointed this out
in its Communication on an EU-wide
coordinated economic response from 13 March 2020 where it proposed using all available EU tools to mitigate the consequences of the
Deferral of social contributions
The umbrella organisations of the German social security
system also recommend a deferral of social security contributions for companies which are struggling during the
pandemic. According to the National Association of Statutory
Health Insurance Funds (GKV-Spitzenverband) and the German Pension Insurance (Deutsche Rentenversicherung), social insurance
contributions should be temporarily deferred. Employers, who have understandably gotten into financial difficulties due to
the Corona crisis, should be allowed to pay their employees’ social security contributions later in
March and April. The prerequisite for this, however, is that all other measures from the various
aid packages and support provided by the federal
government have been exhausted. The German
Social Accident Insurance (DGUV) also points out that its institutions are offering relief regarding social insurance contributions to companies
in financial distress.
The Temporary Framework is initially valid until the end of
December 2020, but the European Commission will review whether
an extension is necessary before the end of this period.