EXPLAINED: How Germany’s new multibillion aid package will benefit you

The government has agreed on a huge economic stimulus package aimed at kick-starting the economy and supporting people in Germany. From families to consumers and business owners, this is how it measures up.

EXPLAINED: How Germany's new multibillion aid package will benefit you
Children at a Kita in Dresden, Saxony. Families are to benefit from the new package. Photo: DPA

Germany is ploughing €130 billion into a stimulus package to kick-start the economy which has been severely hit by the coronavirus pandemic, Chancellor Angela Merkel confirmed on Wednesday June 3rd.

With border closures, employees hit with reduced hours or forced to stay home, and the shutdown of restaurants, bars, shops and clubs to slow down the spread of coronavirus, Germany is headed for the worst recession in its post-war history.

To fund the unprecedented package, parliament has approved new borrowing, marking a big change in German economic policy.

Here's how the German government is planning to help the country get on its feet again, and who will benefit.

READ ALSO: Germany agrees €130 billion package to kick-start economy hit by coronavirus pandemic


The leaders of the grand coalition, made up of Merkel’s Christian Democrats (CDU), their Bavarian sister party, the CSU and the centre-left Social Democrats (SPD) have agreed on a temporary reduction of VAT. 

This measure is aimed at boosting domestic consumption to help kick-start the economy.

From July 1st to December 31st 2020, the VAT rate is to be reduced from 19 per cent to 16 per cent, and the reduced rate from 7 per cent to 5 per cent. The reduced rate applies to goods for everyday use, such as food.

It will cost the German government around €20 billion.

Families and daycare centres (Kitas)

Families in Germany are to get more money with the introduction of a one-off bonus of €300 planned for each child. The Kinderbonus is taxable.

There will be an additional €1 billion for extensions, refurbishments or the new construction of Kitas and crèches – and to improve the hygiene situation in these facilities.

READ ALSO: When and how will Germany's daycare centres reopen?

Employees and employers

As a result of the coronavirus crisis, expenditure in all social security schemes is increasing. In order to prevent an increase in non-wage labour costs, the coalition government is planning a “Social Guarantee 2021”.

Social security contributions are to be stabilized at a maximum of 40 percent, through subsidies from the federal budget worth billions. This is to protect the net income of employees and offer reliability to employers.

Hard-hit small and medium-sized companies

Industries and firms under particular pressure due to the crisis – including hospitality, tourism and entertainment – will receive “bridging help” worth €25 billion in total this summer.

The aim is to prevent a wave of bankruptcies among small and medium-sized businesses whose sales have collapsed due to the shutdown. The bridging aid is to be granted for the months June to August.

It is to apply to sectors such as the hotel and restaurant industry, clubs and bars, travel agencies, entertainers, but also professional sports clubs in the lower leagues. Fixed operating costs of up to €150,000 for three months will be reimbursed.

Tax breaks for companies are also planned. Meanwhile, a programme to mitigate coronavirus effects in the cultural sector is also in the pipeline, to the tune of €1 billion.

The catering industry has been hit hard in the crisis. Photo: DPA

READ ALSO: Is Germany doing enough to ensure small businesses survive the coronavirus crisis?

The coalition also wants to spend more money on artificial intelligence and on the expansion of the new super-fast mobile phone broadband 5G. Modernisation and digitisation of existing infrastructure is to be promoted across Germany.

Electricity customers

Residents and companies in Germany are to be relieved of electricity costs.

The EEG levy, which promotes green electricity plants, is to be reduced from 2021 through subsidies from federal budget.

So in 2021 it is to be 6.5 cents per kilowatt hour and in 2022 6 cents – currently the levy, which citizens pay via their electricity bill, is 6.76 cents.

READ ALSO: Germany divided over new coronavirus stiumlus package

Drivers and the car industry

The grand coalition has decided against a controversial proposal for a purchase rebate for low-emission petrol and diesel cars. The demand for petrol and diesel cars will instead be boosted by the lower VAT, CSU leader Markus Söder said.

The leaders of the CDU/CSU and SPD, however, have decided on significantly higher rebates for people who purchase electric cars.

Federal subsidies for the existing “eco-rebate” are to be doubled from €3,000 to €6,000 for electric vehicles with a net list price of up to €40 000, for a limited period until the end of 2021. In addition, manufacturers will also receive support.

READ ALSO: Which German industries have been hardest hit by the coronavirus crisis?

The coalition also plans to invest an additional €2.5 billion in the expansion of the charging network for e-cars and in the promotion of research and development, for example in battery cell production.

A “bonus programme” of €2 billion is to be set up for the years 2020 and 2021 for future investments by manufacturers and the supply industry. The automotive industry is undergoing a difficult transition towards alternative systems.

Rail and local transport

Deutsche Bahn is receiving financial aid worth billions of euros due to loss of revenue in the crisis. The federal government wants to provide the state-owned company with additional equity capital of €5 billion.

There are also planned subsidies of €2.5 billion for the local public transportation system (ÖPNV).

Local authorities

Municipalities in Germany face high tax losses because trade tax, in particular – the most important source of revenue for them –  is collapsing.

Losses in trade tax revenues are to be compensated by the federal and state governments together. The federal government plans to plough in almost €6 billion.

The goal is that municipalities remain capable of investing – this is viewed as extremely important for the construction and trades industries. There will be no takeover of old debts by the federal government, however due to opposition from the CDU/CSU.

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EXPLAINED: The new rules around getting a sick note over the phone in Germany

Due to high Covid infection numbers throughout the summer, it’s now possible to get a sick note from a doctor over the phone again for some illnesses. Here’s what you need to know.

EXPLAINED: The new rules around getting a sick note over the phone in Germany

What’s happened?

In spring 2020, German authorities changed the law so that people with a mild upper respiratory tract illness, such as the common cold, were able to get an incapacity to work certificate or AU-Bescheinigung by simply calling and speaking to their GP.

The rule was extended several times and finally reversed on June 1st this year due to falling infection figures. Since then people have had to go back to the practice – or do a video call if the doctor’s office has that system in place – to get a sick note.

Now, due to a decision by the Joint Federal Committee, the regulation has been reintroduced and patients can call their GP again for a sick note.

Can I get a sick note over the phone for any illness?

No. As before, the regulation only applies to patients suffering from a mild upper respiratory tract illness. Though Covid has not explicitly been named in the announcement, it seems that it is intended to be covered by the regulation.

If the doctor is convinced that the patient is unfit for work after a telephone consultation, then they can issue a sick note for up to seven days.

READ ALSO: EXPLAINED: The changes around doctor’s notes in Germany you should know

If the symptoms persist after seven days, the certificate can be extended once more for another week.

Why now?

According to the Chairman of the G-BA, Josef Hecken, the regulation has been introduced now as a response to rising Covid numbers and in anticipation of the cold and flu season in the coming months: “We want to avoid full waiting rooms in doctors’ offices and the emergence of new infection chains,” he said.

The telephone sick leave rule is a simple, proven and uniform nationwide solution for that, he said. The rule is also necessary because video consultation hours are not yet available everywhere.

What else should I know?

The health insurer DAK is calling for telephone sick leave in the case of light respiratory diseases to be made possible on a permanent basis in Germany. DAK’s CEO Andreas Storm said that this should “not always be up for debate, because it has proven itself.” 

READ ALSO: Everything you need to know about making a doctor’s appointment in Germany

The social association VdK also welcomed the reintroduction of the rule. The VdK’s President Verena Bentele said that the regulation would help to protect high-risk groups in particular from potential infections.

What are the rules to know about sick notes in Germany?

Germany has a strict system in place. If you are sick, you need to give your employer a Krankmeldung (notification of sickness) before the start of work on the first day (of your illness).

However, you also need to hand in a Krankschreibung (doctor’s note) on the fourth day of your illness. Some employments contracts, however, require you to submit a sick not earlier than the fourth day so check with your boss or HR on that point.