Deutsche Post will keep prices for domestic mail deliveries in Germany stable next year amiduncertainty over the future of its VAT exemption.
The company announced yesterday that the postal regulator, the Federal Network Agency, hasaccepted its 2010 pricing proposals. The price for a standard letter will remain at €0.55 for theeighth year in a row and all other domestic mail product prices will be left unchanged.
Deutsche Post said it is sending “a very clear signal” that it wants to keep prices stable sothat domestic customers may benefit in the coming year from steady mail prices despite risingproduction costs.
Most international mail prices will also be unchanged but some heavier items will be moreexpensive. A large letter (up to 500g) to European destinations will go up from €3 to €3.40, andthe price for International Cash On Delivery (COD) will rise from €3.45 to €4. In addition,international mail charged at kilogramme rates will be more expensive with the per piece raterising to €0.43 from €0.40.
Meanwhile, the new German government is planning to scale back Deutsche Post’s VAT exemptionsignificantly next year, various newspapers reported. The government had already stated in itscoalition agreement that it would bring German postal law in line with EU legal decisions whilekeeping private letters VAT-free.
According to a Finance Ministry initial draft, Deutsche Post would lose exemption for a rangeof products, including negotiated contracts with large customers, heavier parcels and express itemsfrom July 1, 2010 onwards. Competitors could also benefit from VAT exemption for some products ifthey offered these as a ‘universal service’. The changes would generate about €350 million inadditional tax revenues.
Deutsche Post would effectively only retain a VAT exemption for private letters up to 2kg andfor parcels up to 10kg in future. This would create a level playing-field between the nationalpostal operator and private competitors, who currently have to charge 19% VAT on all theirproducts. The draft law is currently under discussion within the government, according to Germanmedia.
Speaking at the German CEP conference this week, Gunnar Uldall, president of the GermanInternational Express Association (BIEK), which represents private express and parcel carriers,said that equal competition would only be achieved if all postal operators were liable to VAT.
