Deutsche Post could lose part of its long-standing VAT exemption status for mail and smallparcels under government plans to bring Germany into line with EU postal law. Competitors have long
complained they suffer a major competitive disadvantage due to the VAT rule.Under a draft law proposed by the German Finance Ministry, Deutsche Post would have to chargeVAT at the full rate of 19% for products sold to corporate customers and public bodies, accordingto a report by the Frankfurter Allgemeine Zeitung. This would cover bulk mail, heavy mail such asbooks and catalogues, parcels of over 10kg and express items. Private consumers sending letters andover-the-counter parcels would not be charged VAT, however.
Other postal companies which already have to charge VAT would be exempted from having to chargeVAT on mail if they could demonstrate that they offered a nationwide distribution service, thenewspaper wrote.
A ministry spokesman, confirming the report, said the draft law, designed to bring Germanlegislation in line with EU postal legislation, would be presented to the German cabinet nextweek.
Deutsche Post is currently exempt from having to charge VAT on letters weighing less than 2kgand parcels of up to 20kg. The European Commission has started legal proceedings against Germanyover the Deutsche Post VAT exemption on the grounds that it presents an obstacle to freecompetition.
The draft law would be similar to proposals presented by Gunnar Uldall, president of the GermanInternational Express and Courier Services Association (BIEK) in the summer. These called forDeutsche Post to retain its VAT exemption for deliveries of up to 50 letters, including privateletters, but be obliged to charge VAT for other products, including bulk mail, parcels andadded-value mail.
