HOT off the press! Global VAT Specialist Group publishes newsletter covering the recent changes in German VAT rates
As part of an extensive legal package to support its economy in the wake of the COVID-19 pandemic, the governing parties in Germany have announced that the Government will reduce German VAT rates as of 1 July 2020. The reduction is scheduled to be applicable until 31 December 2020.
The standard rate in this period will be reduced from 19% to 16%, the special rate applicable e.g. on various food and medical products will go down from 7% to 5%.
For foreign companies conducting business in Germany, the reduction is critical with regard to the actual fulfillment date of a project or an order in Germany, which will define the applicable VAT rate. Using the wrong rate may not only lead to a liability for the performing company, it may also lead to a cash impact; as the receiving party could deny payment of an invoice that shows the wrong tax amount, asking for a correction before paying.
For more information on this developing topic, please contact: Andreas Klier at Pape & Co. GmbH, Munich, Germany [email protected] or Thomas Althoff at RLT Ruhrmann Tieben & Partner, Essen, Germany [email protected]
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To learn more about the activities of the Global VAT Specialist Group, or any of the other Groups, please contact International Business Development Manager, Nicki Lynn [email protected].
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