The government promised quick help in the crisis. But years later, many are being asked to pay back the money. Now the battle in court begins. (Part 1)
During the Corona pandemic, the government promised support for everyone whose livelihood was threatened by the lockdown closures. But some people who received the promised unbureaucratic help and invested the money are now facing a new financial problem. More and more affected people are being asked to repay the benefits they received in whole or in part.
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A look back: the first lockdown
In March 2020, the pandemic began and with it a state of emergency – in Germany, as in most other countries. The coronavirus spread rapidly and there were numerous deaths. In order to contain the risk of infection with the largely unexplored virus, the federal government finally ordered a Lockdown an.
She also promised help for self-employed individuals and small businesses that had to close their businesses and forego their income due to the contact ban. The decision to provide emergency aid was made during the first lockdown.
It was supposed to be quick and unbureaucratic: Companies were facing the end of their existence, the federal government promised financial support without the long application process. And it also assured that repayment would not be necessary, provided the application conditions were met: first and foremost, applicants had to Prove liquidity shortagein other words the aforementioned existential threat.
After Definition of the state of North Rhine-Westphalia (NRW) a liquidity bottleneck existed “if during the three-month funding period the actual ongoing income from business operations was not sufficient to pay the actual ongoing commercial material and financial expenses”.
Nationwide, rescue funds amounted to around thirteen billion euros, plus state funds in the individual federal states. The states were tasked with handling the processing and payment processes independently, but had to implement certain nationwide requirements.
The success rate of the applications varied due to the state’s own processes, but the vast majority were approved. While Rhineland-Palatinate was still stingy on average with an approval rate of 63 percent, in Saxony a full 94 percent of the applications were successful.
Those affected go to court
So far, so good. But the payment of aid did not put an end to the debate – on the contrary. The legality of the Corona aid payments is still being examined, and all examinations are not expected to be completed until the end of 2025. It is already certain that money will be reclaimed in at least 400,000 cases. Resistance to the wave of reclaims is also already emerging.
Courts in various federal states have examined the legality of the recovery notices in several instances and have both ruled in favor of the notices and, in other cases, overturned notices.
The courts are already overwhelmed by the large number of lawsuits against recovery notices. In Stuttgart, the Landeskreditbank, against which around 2,100 lawsuits had already been filed by those affected by the end of June 2024, has joined forces with some plaintiffs in agreed to suspend the proceedings.
In order to process the complaints more efficiently, a few cases will be used to clarify exemplary legal questions that also crop up again and again in others.
As with the application process, the federal states also show varying degrees of ambition when examining possible repayment obligations. While Berlin has so far only called on around five percent of benefit recipients to repay, in North Rhine-Westphalia this has already affected a full 50 percent of applicants.
What sounds unfair is not least due to the fact that the states proceeded differently when paying out aid and NRW, for example, always paid out the maximum amount without first checking the payment conditions. Instead, applicants were asked to determine their liquidity bottleneck themselves “to the best of their knowledge and belief”.
Many countries granted such a leap of faith and paid out Corona aid only on the basis of a self-examination by the applicants. This was the only way to act with the necessary speed. Parts of the government, namely the Federal Audit Office and the Federal Ministry of Economicscritical.
According to Federal Minister of Economics Robert Habeck, the aim is to find a uniform, cross-border regulation for the repayments. This is encouraging. If these uniform rules and clear guidelines had existed earlier, the situation would be easier to understand now.
Confused communication
Even before the first applications for emergency aid could be submitted in March 2020, communication Chaos markedFor example, the federal government stipulated that applicants were not allowed to include their living expenses when calculating the financial bottleneck.
It took until the beginning of April for all countries to include this requirement in their own funding programs. It took even longer for this basic information to reach the applicants. By then, many applications had already been sent off.
After applicants submitted their applications for emergency aid in 2020, they often initially received advance payments amounting to a portion of the assistance they had requested.
In many federal states, there was a feedback procedure after the benefits were distributed. In the state of North Rhine-Westphalia, for example, all people who had benefited from the Corona emergency aid were notified by the state in 2020 and faced with the choicewhether they wanted to submit their return in 2020 or in 2021. An earlier return should have the advantage that it could still be claimed for tax purposes for 2020.
As part of the feedback, you had to offset your own expenses and income during the funding period (March to May 2020) and thus demonstrate whether you had actually suffered a so-called “liquidity bottleneck”.
What exactly the emergency aid was intended for (as a stopgap measure to cover ongoing business obligations According to the complaint of many of those affected, the requirement to fulfill the contract (to be fulfilled) was often unclearly specified or was made known to applicants too late. The result of the feedback was ultimately the “final invoice” – an assessment of whether the state had paid the respective person “too much” or not.
All just provisional?
The time dimension of the process also contradicted the expectations of those affected. With thousands of applications and feedback documents, the states were confronted with enormous amounts of data at the beginning of the pandemic. Only now are they catching up with the application review – and can decide positively or negatively on the original applications.
The crux of the matter: many of the payments that were distributed quickly and unbureaucratically in the first funding period from March 2020 were of a provisional nature. However, the risk of a possible repayment had never really reached those affected. According to Mecklenburg-Western Pomerania’s Minister of Economic Affairs Reinhard Meyer (SPD), for example, the application documents in the state did contain a corresponding note.
However, many applicants have understood the nature of the payments differently. Statements like Olaf Scholz’sthat it is “a grant, not a loan. So nothing has to be paid back”, are probably not entirely innocent in this.
Bitter aftertaste
During the pandemic, everything had to happen quickly. Decisions that affected all citizens and would normally have required careful communication were made more or less overnight. It is only human that mistakes were made or correct information was communicated incorrectly.
It is now all the more important to bring as much order as possible to the emergency aid chaos. A uniform, cross-border procedure for processing applications would be a good start. The legal assessment of the final accounts and repayment notices also makes an important contribution to restoring the sense of justice of those affected.
The courts are an important authority for distributing responsibility for chaos and trouble between the administration and the applicants.
Nevertheless, many are left with a feeling of injustice. Now, years after the pandemic, one of the greatest threats to the German economy, hit many companies, being asked to pay again feels like a nasty surprise.
This applies to all those who, against their better judgment, fraudulently obtained emergency aid in 2020 – there were some of them too, and of course it would be unfair in every respect not to hold them accountable. Nevertheless, those affected do not have to simply accept the unjustified requests for repayment.
In the continuation of this article, you will therefore learn how you can take legal action against recovery notices and which arguments lawyers have already used to successfully obtain the annulment of the notices.
