The most important questions about the Corona grant for freelancers
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You got the Corona grant and now you’re thinking about what that means for you? In our short interview with tax advisor Andreas Reichert, we would like to answer the most frequently asked questions about the Corona grants by the German government:
Who gets the Corona grant, or who is eligible to apply for it?
All freelancers and also companies from 5 to 10 employees are eligible for the grant – the sum granted varies. Self-employed for whom freelancing is not their main occupation are not eligible.
Is it also possible to apply for several grants and companies?
You may submit an application for each independent business individually. In this case, independent business means a separate legal entity. So if I am a freelancer and have different lines of business, I can still only submit one application. But if I have a UG and I am also working as a freelancer, I can submit two applications.
Do I have to be insolvent to receive the grant?
Insolvency is exaggerated in this case. Perhaps here the wrong term has been chosen. The prerequisite is that you can no longer cover your running costs with your current income. That means you have a loss of income, but the expenses continue. Up to the sum of these running costs you may apply for the government support grant.
Do I have to use up my savings or reserves first?
No, you don’t have to use up your savings or reserves, it’s simply a matter of your current income and expenses.
Do I have to be a German citizen to be eligible for the Corona grant?
No, it is sufficient to be registered with a German tax office. That means you need a tax number and a tax identification number. That is enough to apply for the grant.
Am I also entitled to apply for the Corona grant as a founder of a new company?
Founders can also apply for the grant, if they were active in the market before 12.3.2020. There is no exact definition of the extent to which you had to be active in the market and there is no precise information on this yet. But the moment you have issued e.g. an invoice, you would probably considered to be actively in business and therefore eligible for the grant.
Do I have to pay taxes on the Corona grant?
Yes, the corona grant is subject to income tax and the solidarity surcharge (Solidaritätszuschlag) and, in the case of corporations, corporate income tax. It is however not not subject to VAT.
What can I use the Corona grant for?
The Corona grant may be used for running operating expenses, such as shop or office rent or leasing costs. But, and this is actually the more interesting question, it may not be used for ongoing living costs or health insurance. For this purpose, other forms of assistance may have to be applied for.
Is there a Corona grant for part-time freelancers?
Freelancing has to be your main occupation to be eligible.
Is the corona grant also available for students?
Basically yes, but they would have to carry out their freelance work as their main occupation. This will usually not be the case.
What happens if I have received the corona grant and now I realise that I don’t meet the requirements?
It is very probable that it will be checked afterwards whether the requirements were met – i.e. probably in 2021 – and in the worst case the grant will have to be paid back and in the very worst case also with penalty and interest.
How is it checked whether I have received the Corona grant legally and how do I prove this?
There is not yet any precise information on how it is checked whether the Corona grant was too high or whether you have to pay it back. But you should be well prepared for this by preparing your bookkeeping properly, collecting all expenses and keeping your bookkeeping up to date. It is very likely that the authorities will simply look at the months in which you have received the Corona grant and the time period in which you were allowed to spend that money.
💡 Tip from Accountable: With our app you can scan and digitise all your receipts for the corresponding months and are thus optimally prepared for a possible audit.
How is the Corona grant for freelancers calculated?
The grant is intended to cover operating expenses for three months. The three months start with the date of application. It is also only about the operating costs. For example: If I now cover operating costs of EUR 2,000 per month, then I can apply for a maximum of EUR 6,000. There is one more exception: If I was able to reduce my rent by at least 20% in advance, i.e. if the landlord waives part of his rent, then I can cover the expenses for five months with the grant. So if I have running costs of 2,000 EUR per month, I can then deduct a maximum of 9.000 EUR.
What would be your pragmatic tip for freelancers who have received a grant? How should they handle it?
First of all: Save money, save expenses, decrease your costs as much as you can. Second: Do your bookkeeping right, document every expense you have, so you have it easier next year to prove that you did everything correct in the context of the Corona grant. Third one: Stay informed and look at the government regulations, so that you don’t miss out on any further grants or changes.