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Germany seeks approval from EU to waive VAT on new energy bill levy

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Germany finance minister Christian Lindner. Photo: Liesa Johannssen-Koppitz/Bloomberg

Germany finance minister Christian Lindner. Photo: Liesa Johannssen-Koppitz/Bloomberg

Germany finance minister Christian Lindner. Photo: Liesa Johannssen-Koppitz/Bloomberg

German finance minister Christian Lindner has written to the European Commission seeking permission to waive value added tax (VAT) on a new gas price levy for a limited period of time, a copy of his letter seen by Reuters showed yesterday.

Germany’s gas market operator is set to announce today the size of the levy, which Berlin is imposing on all gas consumers to spread the additional cost of gas imports.

The levy is aimed at helping Uniper and other importers cope with soaring prices due to reduced Russian export flows, but it would add to already sky-high energy prices and inflationary pressures for customers.

Under EU law concerning VAT on energy products, the levy is considered a component of the overall gas price, effectively meaning it is mandatory, which is why Germany needs to ask for Brussels’ permission to waive it.

Mr Lindner said that while he was asking on behalf of Germany, he was effectively asking for a VAT law change that would give all member states the temporary option to make similar moves.

Mr Lindner’s English-language letter, dated August 12, said Germany would apply formally to the EC later but he wanted to appeal to Brussels beforehand to persuade authorities that policymakers were concerned about possible hardships and resentment.

“VAT on government-imposed levies pushes up prices and is met with increasing opposition from the population, especially in the current exceptional situation,” he said.

“However, the population’s acceptance of tax laws is crucial for their enforceability,” it said.

Meanwhile, German gas storage facilities were slightly more than 75pc full on Friday, a couple of weeks ahead of target, data from European operators group GIE showed yesterday.

Germany has 23.3 billion cubic metres (bcm) of underground gas storage, a little more than a fifth of the 100 bcm of gas used in 2021.

The Rehden storage unit, which holds 4 bcm, was 54pc full, the GIE data showed.

Germany is at phase two of a three-stage emergency plan formulated after a reduction in gas flows from Russia. That causes serious headaches for German industry, which accounts for a quarter of the country’s gas demand.

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