Germany to Revert to Regular VAT Rate on Gas Earlier than Planned

• The German government plans to increase the VAT rate on gas to the regular rate from January.
• The plan was approved by Finance Minister Christian Lindner and the cabinet.
• The VAT rate had been temporarily reduced from 19% to 7% due to high energy prices following Russia’s attack on Ukraine.
• The special regulation is set to expire three months earlier than planned, pending approval from the Bundestag.
• Experts predict higher gas prices during the heating season due to this change.
• The reduction was always intended as a short-term relief, according to the Finance Ministry.
• The government plans to extend energy price brakes until spring as a safeguard against unexpected price increases.
• The Union party sees a contradiction in extending energy price brakes while increasing VAT on gas.
• The Association of Municipal Companies (VKU) also disagrees with the decision, stating it would increase gas and heating prices by 12 percentage points from 1 January 2024.
• The VKU hopes that the members of the German Bundestag will correct this decision and stop the tax increase in parliament.
• The early return to the higher tax rate could mean an additional 2.1 billion EUR in tax revenue for the state coffers.

Source: haufe.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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