Germany suspends beer tax to help brewers through lockdown

The German government has allowed breweries to defer their annual beer tax payments to keep them financially stable during the country’s coronavirus lockdown.

Applications to defer tax payments can be made up until 31 December, the ministry said on 6 April, and will be eligible for taxes due now or any that were scheduled to be paid up until that date.

Germany has been under its own lockdown, with restaurants and most shops closed, since March 22. Gatherings of more than two people are banned, except for those who live together. Restaurants and bars have been told to close unless they offer takeaway or delivery services. The measures are stricter in the states of Bavaria and Saarland, where residents have been told to stay at home. Chancellor Angela Merkel announced last week that the measures would be in place until at least April 19.

Germany’s breweries are expected to pay roughly €650 million (£572 million) in beer tax from production in 2019, according to the ministry of finance.

But the payment has been waived to give the country’s brewers more cash to protect workers’ jobs while beer sales stall during the lockdown. Interest on the deferral will also be waived.

“In order to improve the liquidity of breweries in the current difficult situation and to protect jobs, the Federal Ministry of Finance and the state counterparts have agreed that the beer tax can be deferred”, a spokesman for the Federal Ministry of Finance told German media agency dpa.

“The main customs offices are to accommodate the breweries to avoid undue hardship. Charging interest on the deferral can be waived, as a rule,” the ministry spokesman said.

The decision follows similar actions from other governments designed to protect businesses from the worst of the economic impact of coronavirus.

In his latest budget, Chancellor Rishi Sunak froze duties for beer, wine and spirits, only the second time in 20 years that such a measure has been taken. 

However, a survey by the Wine and Spirit Trade Association (WSTA) has shown “overwhelming support” for a further six-month freeze on alcohol duty in the UK, while 84% of respondents also backed a halt on new laws amid the pandemic.

According to trade bodies the Society of Independent Brewers (SIBA) and WSTA, businesses received their first duty bills last week (25 March) and were unable to pay, while some have been granted a deferment by HMRC for three months.

The WSTA is now calling for this deferral to be changed to a duty suspension, allowing companies to hold on to vital funds to keep them afloat amid the pandemic.