The government will end the tax discount on energy deliveries three months early
Berlin is planning to restore a 19% sales tax on gas and heat deliveries from the end of this year, Bloomberg reported on Monday, citing the German government. The move will effectively end the current discount rate three months earlier than planned.
The value-added tax on natural gas was cut from 19% to 7% last October to ease the pressure on consumers amid soaring energy costs. The measure was supposed to last until the end of March 2024.
According to deputy German government spokesman Wolfgang Buechner, Berlin decided to end the discount early because prices had returned to a “normal level” more rapidly than expected. The government is in the process of drawing up the legislation needed to enact the change, he told a press conference on Monday, as cited by Bloomberg.
Meanwhile, a spokesman for the country’s Finance Ministry, Oliver Olpen, reportedly said the restoration of the higher rate would lead to a rise in public-sector tax revenue of €2.1 billion ($2.2 billion).
Germany relied on Russia for roughly 40% of its natural gas prior to 2022, and was among the hardest hit by the reduction in Russian energy deliveries last year, which were almost entirely halted after the EU imposed sanctions on Moscow in response to the conflict in Ukraine.
A recent report by the German Economy Ministry projected that gas prices in the EU’s largest economy are likely to soar and remain high until at least 2027, unless additional emergency measures are taken.
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