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23.03.2020 – 14:10

Global Communication Experts

Corona Virus Update Germany March 23, 2020 - Including Economic Recovery Plan - Corona Germany

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Corona Virus Update Germany March 23, 2020 –

Including Economic Recovery Plan – Corona Germany

General situation in Germany

In Germany, we have more than 24.000 confirmed cases of COVID-19. 94 people have died in Germany in relation to the virus.

The federal government and the state governments want to slow down the spread of the coronavirus with further and unprecedented drastic restrictions. Chancellor Merkel announced yesterday, that public gatherings of more than two people will be banned throughout Germany for an initial period of two weeks - with the exception of relatives living in the same households. Those who do not follow the rules will be threatened with fines. Restaurants are closed now, except for the delivery of food for the home. Supermarkets, pharmacies, banks, gas stations, etc. will remain open.

Germany implemented border controls at the borders to the following countries: Austria, Switzerland, France, Denmark, and Luxemborg. Only commuters and movement of goods are allowed to cross the borders at this point. Furthermore, the European Union closed all its external borders until mid April for citizens of third countries.

The Minister for Foreign Affairs, Heiko Maas, extended grobal travel warnings for Germans going abroad until end of April.

Austria and Switzerland are going the same ways and having in place comparable measures.

Situation in the tourism sector

The German Government issued an offical worlwide travel warning until the end of April. Furthermore, the Department of Foreign Affairs advises Germans to not realize any leisure trips within Germany.

Most touroperators extended the cancellation of all their trips until the end of April due to the official worldwide travel warning, such as TUI, DER Touristik, FTI, alltours and many more.

Lufthansa, Germany’s biggest airline, announced that from the beginning of this week, a return flight schedule will be in effect for the airlines in the Lufthansa Group. This will initially be valid until 19 April 2020. Long-haul flights are offered as scheduled from Frankfurt and Zurich. Lufthansa's intercontinental flight schedule from Frankfurt is as follows: three times a week to Newark, Chicago (both USA), Montreal (Canada), Sao Paulo (Brazil), Bangkok (Thailand), Tokyo (Japan) and Johannesburg (South Africa). In addition to a substantially reduced short- and medium-haul timetable (48 services from Zurich), SWISS will in future offer three weekly long-haul flights to Newark (USA). From its hubs in Frankfurt and Munich, Lufthansa still offers around 40 daily connections to the most important cities in Germany and Europe.

In order to bring as many people as possible back home quickly, the airlines of the Lufthansa Group are currently operating numerous special flights all over the world in close consultation with the governments of their respective home countries and on behalf of tourism companies. With around 130 extra flights operated by Lufthansa, Eurowings, Swiss, Austrian Airlines, Brussels Airlines and Edelweiss, around 25,000 passengers have so far flown home. Around 100 further flights are already being prepared.

The leisure airline Condor is in close contact with the responsible authorities in Germany and abroad to ensure that holidaymakers are returned home as quickly as possible. We are in close contact with the German Foreign Office for further support. Condor is part of the “Luftbrücke” initiative of the Federal Foreign Office. On the specially set up website, holidaymakers wo are currently abroad can use the online form to specify where they are currently located. A large number of return flights to Germany are operated regularly and as planned. An overview for the next 72 hours can be found on the airline’s website. It will be continuously updated.

Economic Recovery Plan – Corona Germany

The Federal Government wants to react quickly, measures with immediate impact due to the effects of the Corona Virus. A three-pillar program is planned.

1st Pillar: Payment Flexibility for Employees due to Short-Time Work

By early April, the short-time worker regulation is supposed to be adjusted with clear guidelines. Easier requirements for the promotion of short-time worker benefits are the intention:

- Reduction of the necessary number of employees in the company affected by loss
  of work of up to 10 percent (previously one third)
- Partial or complete waiver of the creation of negative working time accounts
- Short-time work allowance also for temporary workers
- Complete reimbursement of social security contributions by the Federal
  Employment Agency. 

2nd Pillar: Fiscal Liquidity Support for Companies

In order to improve the liquidity of companies, the idea is to make things easier by being able to defer tax payments, reducing advance payments and also in the area of enforcement. The following is planned:

- Tax deferrals are at the discretion of the tax authorities. They can be
  granted if the tax collection would provide an extreme burden. The tax offices
  should not enforce strict regulations and facilitate deferrals.
- The interest provided for deferrals should be waived.
- If it is foreseeable that the taxpayers' income will be lower in the current
  year, the tax prepayments should promptly be reduced
- As far as the debtor of a due tax payment is directly affected by the Corona
  Virus, enforcing measures (e.g. Account attachments) or late payment
  surchargers should be delayed should until December 31, 2020. 

The Federal Central Tax Office is instructed to proceed accordingly in the cases related to sales tax.

3rd Pillar: Liquidity for Companies

Declining sales without one’s fault and are due to disruptions in the supply chain or result from a significant drop in demand with ongoing high operational costs mean that healthy companies are in financial trouble without any fault on their part. The Federal Government wants to protect the liquidity of companies with new, and in terms of volume, unrestricted measures. To this end, the existing liquidity aid programs will first be expanded to facilitate access to cheap credits. The established instruments to support the credit supply of private banks are to be expanded and made available to more companies:

- The conditions for the KfW(*) Entrepreneur Loan and the so-called ERP start-up
  loan – on a universal level will be loosened. Risk assumptions (exemptions
  from liability) for working capital loans are to be increased and the
  instruments also to be opened to large companies with a turnover of up to two
  billion euros (previously: 500 million euros). Higher risk assumptions of up
  to 80 percent for working capital loans of up to EUR 200 million are intended
  to stimulate the willingness of house banks to grant loans.
- The program for larger companies is to be expanded from a turnover limit of
  two billion euros to five billion euros. The funding area (previously only for
  innovation and digitization) is to be expanded. The risk assumption will be
  increased up to 70 percent instead of the previous 50 percent.
- As before, support for individual companies with a turnover of more than five
  billion euros should be provided, will be evaluated on an individual basis. 

The maximum guarantee level at the guarantee banks is to be doubled to 2.5 million euros. The federal government will increase its risk share at the guarantee banks by 10 percent. The upper limit of 35 percent working capital on the total liability of the guarantee banks is to be increased to 50 percent. Guarantee banks should be able to make credit guarantee decisions up to an amount of EUR 250,000 independently and within three days.

A large guarantee scheme (parallel federal-state guarantees), which was previously limited to companies in structurally weak regions, will be made accessible to companies outside these regions. This is intended to secure working capital financing and investments from a guarantee requirement of EUR 50 million. and with a guarantee rate of up to 80 percent.

Additionally, the Federal Government is planning further measures that still need to be approved by the EU Commission:

Additional special programs are to be set up at the KfW for companies that are temporarily experiencing serious financial difficulties due to the crisis and therefore do not have easy access to the existing funding programs by increasing KfW's risk tolerance appropriately. To this end, the risk assumption for investment funds (exemptions from liability) should be significantly improved. They should be up to 80 percent for operating material, and even up to 90 percent for investments. (*) KfW (Kreditanstalt für Wiederaufbau), which is a German state-owned development bank

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