Many products in supermarkets, furniture stores, electrical stores and many others are likely to become cheaper for six months due to the planned reduced value-added tax.
VAT rates will be reduced temporarily from July 1st through December 31st, 2020. The standard VAT rate will go from 19% percent to 16% and the reduced rate from 7% to 5%. The reduced rate applies to a portion of consumption in Germany including some foods, transportation options, reading materials, and cultural events.
However, the Finance Ministry points out in its draft law that the tax reduction will only have the desired effect if it is passed on to consumers, i.e. if supermarket prices really do fall.
For businesses, this would involve additional expenditure. That is because new calculations and labeling would have to be carried out. Some critics believe this too bureaucratic and therefore say that the lower value-added tax should apply for a period longer than six months to make it worth the effort.
Tips:
From the 1st of July until the 31st of December 2020 the regular tax rate in Germany will be 16% so if you have a Company out of Europe and you sell in the European market try to sell from the German warehouse. Remember that you pay the VAT rate in the country where the delivery starts.
It is very important to note the law says that in the Intracommunity movement the date to take care is the arrival date of the products to the country.
