The German parliamentary vote on Friday to end Deutsche Post’s VAT exemption from July onwardshas been welcomed by rival postal and parcel operators who claim prices for mail and small parcels
could fall as a result.The German Upper House (the Bundesrat) approved a bill bringing the country’s taxation law intoline with EU regulations after the Lower House (the Bundestag) passed the measure earlier thismonth.
The intention of the law is to create a level playing-field between the national postal operatorand private competitors, who currently have to charge 19% VAT on all their products. The new VATregulation has long been demanded by Deutsche Post’s competitors who claim that the presentexemption distorts competition in the fully liberalised postal market.
Under the new law, providers of a universal postal service, whether Deutsche Post orcompetitors, are exempt from VAT for the delivery of private letters up to 2 kgs and of parcels upto 10 kgs. However, all other postal products and services will be liable to VAT, including maildelivery contracts negotiated with large customers, heavier parcels and express items.
The main effect of the new law will be to force Deutsche Post to charge VAT on non-universalpostal service products. The standard German VAT rate is 19% and the change is expected to generateup to €500 million in additional tax revenues.
In response, the international express and parcel operators association (BIEK), which representslarge private operators, welcomed the passage of the new law which, it said, would lead to morecompetition, better service and lower prices. “The new law will lead to more competition for postalservices. This will result in better service quality and cheaper prices for consumers. Priceincreases are not to be expected,” the association’s president Gunnar Uldall declared.
The courier and express services association BdKEP, representing smaller operators, alsowelcomed the new law as creating fair competition in the market. But it remains to be seen howDeutsche Post will seek to compensate for the additional costs, it added. “I expect that thecurrent prices will fall on a net basis in order to remain competitive,” said BdKEP chairman RudolfPfeiffer. “The first objective of the European postal market liberalisation would thus be achieved:competition leads to falling prices… I assume Deutsche Post will now face up to thecompetition.”
