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German Ministry of Finance announces more details regarding VAT rate cut

On 12 June 2020, the German Federal Cabinet adopted the first comprehensive measures of the economic stimulus package to address the economic consequences of the corona pandemic. These include in particular the temporary reduction of VAT in the second half of 2020: VAT will be reduced from 1 July 2020 to 31 December 2020. The regular tax rate will fall from 19 % to 16 %, the reduced tax rate from 7 % to 5 %.

To this end, the Federal Ministry of Finance has published a draft Circular of the Federal Ministry showing further details including the coordination with the supreme tax authorities of the federal states. The final outcome of the discussions remains to be seen. The latest draft available reflects the status as of 11 June 2020 and can be downloaded from the website of the Federal Ministry of Finance