· Insight

M&A COVID-19 Wire XX

1. Insolvency Law

With Act dated 15 February 2021 the obligation to file for insolvency has been suspended under certain conditions with effect from 1 February 2021 until 30 April 2021 for companies that have applied for financial assistance from 1 November 2020 until 28 February 2021 as part of the government assistance programs to mitigate the effects of the COVID-19 pandemic.

As things stand at present, from 1 May 2021, illiquid as well as over-indebted companies will, without exception, be required to file for insolvency pursuant to Section 15a of the German Insolvency Code. In case of over-indebtedness, since 1 January 2021, a maximum insolvency application period of six weeks applies. If the reason for insolvency is illiquidity, the maximum insolvency application period remains three weeks. Further privileges, such as those concerning the contest of debtor’s transactions, are no longer in place once the suspension of the obligation to file for insolvency no longer applies.

2. German Tax Law

a) Tax Relief Measures again extended

Germany took extensive measures to combat the serious economic effects of the COVID-19 pandemic. By circular of 18 March 2021, the German Federal Ministry of Finance again extended the application of certain tax relief measures:

  • Deferral of tax payments until 30 September 2021 and, in general, further deferral beyond this date until 31 December 2021 at the latest if taxpayer agrees on instalment payments;
  • Waiver of enforcement measures until 30 September 2021;
  • Reduction of advance tax payments in 2021.

These tax relief measures are only granted if the taxpayer is directly and not insignificantly affected by the COVID-19 pandemic and files a respective application until 30 June 2021 for a deferral of tax payments and/or a waiver of enforcement measures respectively until 31 December 2021 for a reduction of advance tax payments.

b) Improved Write-down of Digital Assets

Assets with a useful life of more than one year are, in general, depreciated on a pro rata basis over their useful life.

By circular of 26 February 2021, the German Federal Ministry of Finance decided that under certain conditions a useful life of one year can be taken as basis for certain computer hardware and software (previously three and five years, respectively). This allows for the full and immediate depreciation of these assets in the year of their acquisition/production. The improved write-down applies for fiscal years ending after 31 December 2020.

Note: The improved write-down should, in general, be an opt-in right of the taxpayer. Therefore, it should be considered not to opt if – due to the COVID-19 pandemic – sufficient tax profits for an immediate offsetting are not available.

The implementation of the improved write-down by a circular letter of the German Federal Ministry of Finance was temporary on hold to consider if an action by the German legislator is legally required.

c) New Draft Bill: Option of Partnerships for Taxation as Corporation

On 3 June 2020, the German Federal Government adopted an extensive economic recovery package. This package provides, in particular, for the implementation of an option for partnerships (transparent entity) to opt a taxation as corporation (opaque).

On 24 March 2021, the German Federal Government published a draft bill in this regard. When opting-in (comparable with the check-the-box-rules under US tax law) the respective partnership’s taxable income would be subject to German corporate in-come tax and German trade tax and the participants of the partnership would be treated as its shareholders for German tax purposes.

Note: The option right would be granted separately to each partnership. Therefore, each group company should be able to exercise the option right separately.

The implementation of an opt-in right corresponds to a long standing demand of the German industry for a taxation of companies regardless of their legal form. The adoption of the current draft bill would, therefore, beyond the COVID-19 pandemic result in a substantial change in German taxation of partnerships.

3. Labour Law

a) Obligation to offer tests

The amendment of the SARS-CoV-2 Occupational Health and Safety Decree dated 13 April 2021 provides the obligation for companies to offer COVID-19 tests to employees at least once a week (twice a week to employees in professions with a high risk of infection) if they do not work exclusively from home. In case of violations, a fine up to EUR 30,000 can be imposed. However, employees shall not be obliged to take up the offer of testing and there is also no obligation for companies to document the extent to which the offer is taken up. Therefore, companies can send self-tests to the employees or provide test kits in the office. As things stand at present, employers have to bear the costs, but may be able to have the cost considered as items in the state aid programs (Überbrückungshilfe).

The decree is expected to come into force next week. The German Federation of Small and Medium-Sized Enterprises (BVMW) has already announced that it will seek for legal actions against the new obligation.

In addition, the existing protective rules in occupational health and safety (including the home office rule) shall be extended until the epidemic situation of national scope is ended by the German Bundestag, but at the latest until 30 June 2021.

b) Vaccination Status of Employees

Information about the vaccination status, a survived COVID-19 infection or a negative test result is qualified as health data and thus belongs to the special categories of personal data according to Article 9 para. 1 GDPR. Due to the increased sensitivity of this data, processing may only take place under the special requirements of Article 9 para. 2 and para. 3 GDPR. In the case of employees in medical practices, hospitals and nursing services, the processing of the vaccination status is unproblematic, as the Infection Protection Act provides a special legal basis (Article 9 para. 2 lit. i GDPR, Section 23a IfSG).

Besides, the vaccination status of employees can only be requested and recorded in the event of prior given consent (Article 9 para. 2 lit. a GDPR). Consents are critical in the employment relationship, as they must be given voluntarily. According to Section 26 para. 2 sentence 2 of the German Federal Data Protection Act, voluntary consent is deemed to have been given if a legal or economic advantage is granted to the employee, for example through bonus payments, gifts or additional vacation days. Since individual case-related considerations regarding the effectiveness of employee’s consent are complex and associated with great legal uncertainty, the Data Protection Conference, in its press release of 31 March 2021, addressed the request for a legal basis that meets the strict requirements of Article 9 para. 2 GDPR when processing health data.

However, the collection of health data by employers is associated with fewer uncertainties in cases of detected infections, a contact with a verified infected person or return from a risk area (classified by the Robert Koch Institute), in order to prevent the spread of the virus among the employees.

If you have further questions, please contact us:

Nico Fischer –
Tobias Jäger –
Marco Ottenwälder –
Christine Funk -
Nemanja Burgić –
Matthias Meier –
Stefan Weinberger –


Authors: Dr. Ralf Bergjan, Dr. Nico Fischer, Tobias Jäger, Dr. Marco Ottenwälder, Christine Funk, Benjamin Maciejewski, Nemanja Burgić , Dr. Matthias Meier, Dr. Stefan Weinberger