Tax Deferral: Who Qualifies and What You Get
Learn how businesses in Germany can request a delay on tax payments when facing temporary cash flow difficulties.
Tax Deferral is a mechanism that allows businesses to postpone their tax payment deadlines. This option is designed to provide breathing room when a company's available cash does not align with its upcoming tax obligations.
Who it's for
This scheme is specifically for businesses that are facing temporary liquidity issues. This means your business is experiencing a short-term shortage of available cash, making it difficult to meet your immediate tax payment obligations despite having assets or expected income in the future. It is intended to help manage cash flow during difficult periods rather than being a permanent solution for ongoing insolvency.
What you get
The primary benefit is the ability to obtain delayed tax payment deadlines. Instead of being required to pay your tax debt immediately on the scheduled date, you are granted permission to settle the amount at a later time. This can help stabilize your business operations during periods where cash is tied up in other areas.
What it costs you
It is important to understand that a deferral is not a waiver or a cancellation of your tax debt. Because you are essentially borrowing time to pay, interest charges will apply to the unpaid amount. These interest costs will accumulate for the duration of the deferral period, so the total amount paid will be higher than the original tax debt.
The catch to know
The most common hurdle is the requirement for a strong written justification. You cannot simply state that you wish to pay later; you must provide a clear, documented explanation of your financial situation to prove that the liquidity issue is temporary and that you have a plan to settle the debt.
How to apply
- Prepare a formal written application, which is referred to locally as a Stundungsantrag.
- Gather documentation that supports your claim of temporary liquidity issues.
- Provide a clear, written justification explaining why you cannot meet the current deadline.
- Submit your complete request to the relevant tax office for review.