Indirect taxes in the new coalition agreement
One of the most anticipated changes is a permanent reduction of the VAT on food in restaurants to 7%. However, there will be little change for consumers as the tax savings are unlikely to be passed on to them.
The electricity tax is supposed to be reduced to the European minimum, which will provide financial relief for businesses, especially in the energy-intensive sectors, and private households alike.
The tax relief on "agrardiesel" is to be reintroduced under the new government. This relief was only introduced last year amid widespread protests from the agricultural sector.
Additionally, the government plans to implement a tax offset model for import VAT. An offsetting model eliminates the liquidity disadvantage for companies resulting from the time lag between the payment of import VAT and the deduction of input VAT. This ensures a level playing field for German companies, as many EU Member States have been using an offsetting model for years.
Despite the recent developments in the European Court of Justice's rulings, the new coalition agreement makes no reference to the anticipated reform of German regulations on VAT groups.
Key takeaway
In summary, the changes in the coalition agreement are a step in the right direction, but the extent of the impact remains to be seen. It is obvious that the measures will be advantageous to businesses in the hospitality industry, farmers, energy-intensive companies, and consumers. However, certain necessary reforms are still pending.
As always, we will keep you posted about new developments in this regard.
