Friday, March 5th, 2021
Child bonus and tax benefits
Federal Council gives the green light for social package
In the Corona crisis, families, companies and the socially disadvantaged should be relieved – through one-off payments, but also through tax reductions. The Federal Council is now paving the way for this. In the case of the child bonus in particular, however, the federal states are demanding financial aid from the federal government.
Families, companies and recipients of basic security benefits receive further financial aid in the Corona crisis. The Federal Council approved a legislative package passed by the Bundestag a week ago, which includes the child bonus, tax relief and social package III with a one-off payment for basic income support recipients. The resolutions at a glance:
- The child bonus of 150 euros is paid for every child entitled to child benefit. There had already been such a bonus last year; at that time it was 300 euros.
- For longer than initially planned, only the reduced VAT rate of seven percent will be levied on meals in restaurants. The regulation would actually have expired at the end of June; it has now been extended until the end of 2022.
- Companies benefit from an expansion of the so-called tax loss carry-back, with which they can offset current losses against previous profits for tax purposes. Here the maximum amount is doubled to ten million euros, with joint investments to 20 million euros.
- Every recipient of basic security receives a one-off payment of 150 euros. In addition, the easier access to basic state security due to the Corona crisis will be extended – this is primarily about protecting the savings of beneficiaries.
- The social package also provides for the reimbursement of lunchtime meals, which are no longer due to the closure of schools and social institutions, to be extended.
In an accompanying resolution, the Federal Council pointed out the enormous burdens on state and local budgets as a result of the child bonus. The federal states demanded in their resolution that the federal government must fully compensate for this by adjusting the sales tax share.
In addition, the federal government must ensure that the child bonus is not offset against child support like child benefit. This should ensure that single parents also benefit to the full extent. This is the only way to achieve the goal of using the child bonus to create an additional demand stimulus to strengthen the economy among families with children.
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