In order to boost the economy after the corona pandemic, Germany has put together an economic package worth billions. On 3 June 2020, the German parliament proposed to temporarily reduce the VAT rates from 1 July 2020 until 31 December 2020.
- Standard rate is to be reduced from 19% to 16%.
- Reduced rate is to be reduced from 7% to 5%
Sources:
- JB Fiscal Consulting
- Der Tagesspiegel
- dw.com
- tagesschau.de
- Mihaela Merz
- EY (short update)
- EY (longer update)
- GlobalVATcompliance
- Pincvision
- VATglobal
- Law360
- Nazar Zaidi – Handling the German VAT decrease within SAP
- BDO
- archyde.com
- datev.de: The Federal Chamber of Tax Consultants doubts that this reduction will be passed on to consumers in its entirety. “We are very concerned about the considerable bureaucracy and changeover effort that will affect all companies, because it is a mass procedure. The necessary IT adaptation of cash register systems, ERP systems, accounting systems, billing programs etc. will hardly be possible within this short time – without errors”. Many detailed VAT questions, such as questions about the recurring invoices, down payments and vouchers, are completely unresolved and the Federal Chamber of Tax Advisers appeals to the Federal Ministry of Finance to publish a corresponding letter on the planned changeover by mid-June 2020.
- kmlz.de also raises some interesting points, especially about the tax point rules. This newsletter also mentions that the average rates for agriculture and forestry and the insurance tax rates, which are usually changed in parallel with the VAT rates, are likely to remain unchanged.
- kmlz.de updated
- Signal – Reduce VAT in the long run?
- Baker Tilly
- AWB
- Grant Thornton
- Vertex: Questioning Germany’s VAT Rate Cut
- Tax Foundation
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