(Finance) – The German government wants to reduce VAT on natural gas from 19 to 7% for a limited period of time. “We will lower the VAT on gas from 19% to 7% as long as this gas tax is collected”. This is what the German Chancellor Olaf Scholz. “I expect – said Scholz – that companies will pass this benefit on to all customers. The question of social justice is crucial for our cohesion”.
The VAT reduction is aimed at directly contrasting the costs determined by the “Gasumlage”, the company-saving gas supplement of 2,419 cents per kilowatt hour which the Germans will find in their bills from October and which allows suppliers to pass on the increases they are sustaining on the energy market to consumers. The Chancellor of Germany, Olaf Scholz, stressed that with the VAT lowering, consumers will have more overall savings than what the gas surcharge will cost them as he expects companies to transfer what they will save with the VAT reduction to their bills.
In recent days, the EU Commission had communicated to Berlin that it is not possible to eliminate VAT from the gas surcharge. “On the issue of the application of VAT it is very important to underline that we are perfectly aware that all Member States and consumers are facing the impact of gas supply disruptions caused by Russia’s war against Ukraine. because we share Germany’s desire to avoid any unwanted impact on the price of gas, for example with the application of VAT – said the European Commission spokesman Daniel Ferrie on the request of the German finance minister Christian Lindner to the EU to exempt from VAT a new tax on the price of gas -. EU Economy Commissioner Paolo Gentiloni responded yesterday by suggesting a series of different options and solutions that Germany could follow in line with the amended VAT directive. It is possible to apply reduced rates to a minimum of 5% “. A possibility that derives from the new amendment of the VAT directive on certain sectors and products. Hence the alternative solution decided by Berlin of an overall reduction in VAT on natural gas. The 7% VAT exists in Germany for some goods and services and now natural gas will be included in this range. According to the German news agency Dpa, “the measure will be active until the gas surcharge is foreseen, ie March. 2024 “.