- 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.
