Reduced VAT Rate on Wood Chips as Firewood Clarified by BMF Letter Dated July 15, 2025

• Reduced tax rate applies to the supply of wood chips as firewood
• Wood chips are made from various types of wood, including industrial chips from sawmill residues and forest chips from treetop or weak wood during forest maintenance
• The application of the reduced tax rate has been a topic of discussion
• The BMF clarified the application of the reduced VAT rate on wood chips as firewood in a letter dated 15 July 2025
• Previous guidance from 17 April 2025 was withdrawn on 6 June 2025
• Until the new guidance, principles from BMF letters dated 4 April 2023 and 29 September 2023 remained in effect
• The BFH ruled that wood chips qualify for the reduced tax rate if considered firewood under EU guidelines
• This decision followed a broad interpretation of firewood by the European Court of Justice

Source: datenbank.nwb.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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