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German VAT rate cut – BMF issued updated draft transitional guidelines on June 23, 2020

On June 12, 2020, the Federal Cabinet decided on the first extensive measures of the economic stimulus package to resolutely address the economic consequences of the corona pandemic. In particular, this includes the temporary reduction in sales tax in the second half of 2020: sales tax will be reduced from July 1, 2020 to December 31, 2020. The regular tax rate drops from 19% to 16%, the reduced tax rate from 7% to 5%. To this end, the Federal Ministry of Finance is currently coordinating a draft accompanying BMF letter with the highest financial authorities of the federal states. The final outcome of the discussions remains to be seen. The first draft of June 11, 2020 has been updated. The draft available here now reflects the status of June 23, 2020.

Source BMF (in German)

Unofficial translation in English