Leading competitors are demanding the abolition of Deutsche Post’s VAT exemption in Germany oncethe domestic postal market is fully liberalised from January 2008.
Under German postal law, Deutsche Post is currently exempt from having to charge 19% VAT onmail and parcels up to 20kg since these services are defined as part of the universal postalservice. This has long been criticised by rivals as an unfair competitive advantage.
Once the domestic letters market is fully liberalised on January 1, 2008, there will nolonger be any argument to retain this exemption, Ralf Wojtek, chairman of the international expressoperators association BIEK, told this week’s annual German CEP congress. Deutsche Post’s legalobligation to provide a universal service will expire and the German regulator will be responsiblefor ensuring that a universal service is de facto provided, he pointed out.
Furthermore, under a European Court of Justice decision, EU member states cannot permitcompanies in competitive markets to benefit from VAT exemption, Wojtek said. The retention of VATexemption for Deutsche Post could thus lead to “abuse of competition and improper state aid,” hecommented. But he added: “There are no moves yet to abolish the exemption.”
Outlining the legal aspects of German mail liberalisation in 2008, Wojtek also noted theexisting price cap for Deutsche Post would expire on December 31, 2007, and the German regulatorneeded to introduce a new procedure. It was also still unclear whether mail companies would stillbe licensed in the same way from 2008 onwards.
Deutsche Post still has a 92% share of the EUR 10 billion German postal market, even thoughabout 50% of the market is now liberalised, Wojtek said. There are about 20 licensed postal firmswith turnover of more than EUR 10 million.
Herbert-Michael Zapf, CEO of the International Post Corporation (IPC), representing majorpostal operators, told the conference that he was “sceptical” whether full postal liberalisationwould be achieved in the EU in 2009 since the political pressure to take decisions this year wasmissing.
The IPC wanted a “level playing-field” without excessive regulation. The national postalregulators should “enable” competition but not “create” it, Zapf said. Indeed, postal regulationshould become part of national competition law, and there was no need for separate postalregulators, he added.
