Last updated on December 21st, 2022 at 07:47 pm
Thanks to the Coronavirus pandemic, the current financial setback is hitting the self-employed, freelancers and small businesses particularly hard. But the German federal government is taking action and offering financial support system to help businesses during the Coronavirus crisis. Read this post to get an overview of Corona emergency aid for freelancers in Germany affected by this situation.
Self-employed and freelancers are amongst the hardest hit in the midst of all the chaos and financial insecurities caused by coronavirus shitstorm.
Well, let’s add ‘avert pandemic induced financial crisis‘ to the list of ALL the other crap that self-employed people have to deal with.
Orders have stopped pouring in, quarantine measures are stringent and we might even be heading towards a total curfew in some German cities. All this has led to an extreme cut in working hours and staff in nearly every industry. I have already had two clients pause long term contracts. The others are nervous and uncertain about the upcoming weeks and months – like many of us.
As dire as the current situation sounds it’s really important to keep our heads up. In the ideal scenario, any freelancer would already have an emergency financial backup. If not, thankfully there is some state aid available for businesses (big or small), self-employed or freelancers in Germany.
In this post, I have compiled all relevant info that I could find online about the corona emergency aid for the freelancers in Germany affected by this crisis.
This is not an exhaustive list as the situation is still developing. If any new aid and measures are announced by the federal and state governments, I will do my best to update this asap. Please feel free to bookmark this page and check every couple of days for new info.
Another alternative may be to keep an eye on the website of your state’s or city’s official website to get the latest information about Corona emergency aid for freelancers in Germany.
German State Emergency Aid for Companies and Freelancers in Germany
The Federal Ministry of Finance and the Federal Ministry of Economics and Technology have designed comprehensive measures to keep the self-employed, freelancers and companies afloat during the coronavirus pandemic.
Appropriately called, a “Corona protective shield” for business owners and freelancers, the initiative rests on four pillars:
- Facilitating short-time work (Kurzarbeitergeld): If there is no longer enough work for your employees, you can now apply for short-time work compensation. Up to now, this was only possible if one-third of your employees had no more work. Now 10% is already enough for the state subsidy.
- More flexibility in taxes: For example, tax payments can be postponed and advance payments reduced. Enforcement measures will also be waived until 31 December 2020.
- Aid packages worth billions (Hilfspakete): This package focuses on strengthening KfW Bank and the promotional institutions of the federal states. These institutions can provide additional support for enterprises of all sizes. Small businesses (kleinunternehmer) and freelancers are explicitly included in this scope.
- Strengthening European solidarity: European measures such as a “Corona Response Initiative” amounting to EUR 25 billion will be following soon.
What Help Can Freelancers And Artists Receive?
Freelancers and the self-employed artists benefit from government assistance just like other small businesses. There are several possibilities to get financial support.
First of all, freelancers should reach out to their responsible Finanzamt and inquire about a reduction or omission of income tax. Freelancers who have at least one employee can apply for short-time work compensation (Kurzarbeitergeld).
In addition, the VGSD has also announced that self-employed in Germany are also compensated for the loss of work due to the coronavirus. Under the law for the German Protection against Infectious Diseases Act (IfSG) freelancers receive compensation based on the previous year’s profit. This also includes reimbursement of social security expenses for privately insured persons (§ 56 and 58 IfSG).
Read more about compensation under the German Protection against Infectious Diseases Act (IfSG) in the next sections.
However, this state support is only applicable if the self-employed or freelancer cannot earn his living through the home office work. In addition, it also applies to the loss of earnings incurred during a quarantine ordered by the authorities.
Compensation According to Infection Protection Law
If you cannot work due to quarantine, you are entitled to compensation for loss of earnings in accordance with Section 56 of the Protection Against Infection Act.
You must submit an application to the competent authority in your federal state no later than three months after the end of the quarantine measure.
If you don’t know which office is responsible for you, call your local citizens’ office (Bürgeramt) or the public health department. Under certain circumstances, self-employed persons may also receive sickness benefit indirectly through this arrangement if they are ill for a longer period of time.
How Much Compensation Can Self-Employed and Freelancers Expect
The law on the Prevention and Control of Infectious Diseases also provides for financial compensation for self-employed persons and freelancers if they suffer a loss of earnings as a result of a coronavirus protective measure.
§ Section 56(1) of the Infection Protection Act states
“Anyone who, on the basis of this Act, as a person who has dropped out, is suspected of being infected, is suspected of being ill or is subject to prohibitions in the exercise of his previous gainful employment or is subject to prohibitions as another carrier of pathogens within the meaning of § 31 sentence 2 and thereby suffers a loss of earnings, shall receive compensation in money. The same shall apply to persons who have been or will be separated as eliminators or suspected infectious agents […].
Of course, the calculation of the loss of earnings is not as simple for self-employed and freelancers as it is for salaried employees, as their income usually fluctuates.
§ Section 56 (3) of the Protection against Infection Act states that
“in the case of homeworkers, the average monthly salary earned in the last year before the cessation of the prohibited activity or before separation, and in the case of self-employed persons, one-twelfth of the earned income (Section 15 of Book 4 of the Social Security Code) from the activity for which compensation is due must be taken as a basis”.
The compensation is therefore calculated on the basis of the last annual income reported to the tax office in the tax return.
In order to receive their compensation, self-employed persons and freelancers must personally contact the health office responsible for them.
Learn More About: Freelancing in Germany
Tax Relief for Freelancers and Small Businesses
The federal and state governments in Germany currently offer a range of tax relief measures for self-employed persons and companies. These include, for example:
- Reduction or suspension of current advance payments of income tax or corporation tax on application
- Deferral of tax payments due
- remission of late payment fines
- Waiver of enforcement measures
- Employers can have social security contributions for lost working hours fully reimbursed by the state (previously only 50 per cent)
As you may know, freelancers have to pay advance tax payments. In this current crisis, it can get really expensive especially if freelancers are not able to get new work for an unforeseeable future.
It is essential that you speak to your tax advisor or your local tax office (Finanzamt) now so that no further tax payments are due for the time being.
In detail, the Federal Ministry of Finance has announced the following measures:
- The tax offices can now reduce tax prepayments in an uncomplicated way.
- If you have already accumulated tax debts from previous years, you can now also receive a deferral (a so-called tax deferral) and do not have to pay interest.
- Enforcement measures such as account seizures are to be suspended until 31 December 2020.
Corona Crisis Loans and Grants For The Self-Employed in Germany
The state development bank, KfW is currently working to implement the billion-euro aid programmes for supporting the businesses in Germany.
This chart shows which programme is suitable for whom. The conditions for these programmes are being eased in view of the corona crisis.
KfW plays an important role in supporting the economy in Germany. The KfW Bank grants loans at special conditions and ensures that your business does not run into payment difficulties.
The most important facts at a glance:
- Who can apply for KfW assistance?
You can apply for a KfW loan as a freelancer or self-employed person, just like any large company.
- Where can I get a KfW loan?
There are no branches of KfW. Therefore you normally apply for a loan through your current bank (Hausbank).
- How long does the application take?
The normal waiting period of a few weeks will be extended due to the current rush for KfW loans. However, the waiting time cannot be predicted accurately at the moment.
More Information About Corona Emergency Aid For Freelancers in Germany
Many Federal states are planning to offer emergency aid (Soforthilfen) to affected self-employed and freelancers in Germany. After all, they need immediate support right now to compensate for the loss of earnings.
Bavarian state government has already set up an emergency aid programme aimed at companies and self-employed who are facing the burn of the Corona crisis. The goal of this program is to get help to the affected businesses as soon as possible.
Whether the recipients actually needed the aid will only be verified after the pandemic crisis is over. This way, the funds can reach those in urgent need quickly and without any red tape.
Any Corona emergency aid that will be paid out without verification can be audited and reclaimed after the crisis is over.
Here are the links where you can find info about emergency aid in your federal state in Germany (in alphabetical order):
- Baden-Württemberg: Information on support for affected companies
- Bayern: In Bavaria, companies receive a grant as part of the Corona emergency aid. For companies with up to five employees, the amount is 5,000 euros. As far as I know, this is currently the only programme under which self-employed people do not have to pay back the money they have received (as of 19 March). Here you can find the Form für Soforthilfen (emergency aid).
- Berlin: Applications for liquidity assistance are accepted from 19th March, more information on the assistance can be obtained from the Investitionsbank Berlin. IBB also announced a grant of 15,000 euros for self-employed from various industries.
- Brandenburg: You can apply for emergency financial support using the questionnaire for companies in Brandenburg.
- Bremen: In case of financial crisis due to corona chaos you can contact the task force of the development bank (Förderbank) in Bremen.
- Hamburg: Hamburg is expected to start an emergency aid programme on 23rd March. Solo self-employed persons will receive 2500 Euros after application, companies with up to 10 employees 5000 Euros. IFB Hamburg also provides various credit programmes.
- Hessen: The Hessen Ministry of Economics, Energy, Transport and Housing has info about support programmes during the Corona crisis here.
- Mecklenburg-Vorpommern: Financial aid strategy is still being developed, but there is already relevant information on tax relief for self-employed.
- Niedersachsen: The Lower Saxony Ministry of Economics, Labour, Transport and Digitisation answers several FAQs, hotlines and other important information for companies affected by the coronavirus on its website.
- Nordrhein-Westfalen: Contact persons for financial crisis support can be found on this website.
- Rheinland-Pfalz: The state government is still working on the concrete strategy, but you can find information about aid programmes and contact persons for self-employed persons and companies.
- Saarland: Saarland is offering information on this site as well as contact details for direct help.
- Sachsen: Companies in difficulty can contact the Beratungszentrum Konsolidierungs (BZK) of the Sächsische Aufbaubank directly.
- Sachsen-Anhalt: The Ministry of Economics, Science, and Digitisation summarises all-important aid programmes on its website.
- Schleswig-Holstein: The state government of Schleswig-Holstein has put together an information sheet with all aid measures of the state development institutes – including hotlines to the customer advisors!
- Thüringen: Thüringer Aufbaubank offers information on liquidity support and risk relief on its website.
So that was the latest summary of the Corona emergency aid for freelancers in Germany. I will keep updating this page as the new info is released by the official sources.
There’s nothing worse than feeling like a situation is completely out of your control AND it’s unclear what we should be doing or even how worried we should be. I hope that any freelancer or a self-employed in Germany currently feeling the burn of this crisis can get some respite knowing that help is available in any worst-case scenario.
Until then, keep your chin up, stay safe and indoors! 🙂