The tax authorities in Germany are looking to temporarily reduce their VAT rates in an effort to stimulate the economy and alleviate pressure on businesses.
Germany has announced its plans to reduce the economic impact and drive local demand with a proposed drop in VAT rates. The draft regulation states the following reductions:
- Standard VAT rate: from 19% to 16%.
- Reduced VAT rate: from 7% to 5%.
The proposed legislation has now been formally adopted and is set to come into effect on 1st July 2020 and remain until 31st December 2020.
If you have a local German VAT ID, this will change the amount you are charging your customers. Please take this into account when setting your prices or speak to our team to see how this will affect your business.
We hope these changes give our German VAT registered clients a boost in sales and encourage consumers to start spending!