WTS Tax Update for the Digital Economy in Germany

Circulars from Federal Ministry of Finance dated June 30, 2020 and November 4, 2020

To face economic consequences of Covid-19 pandemic Germany has introduced different measures with the so called economic and crisis management package. The measures implicate a reduction of standard VAT rate from 19 % to 16 % and the reduced VAT rate from 7 % to 5 % for the period July 1, 2020 until December 31, 2020.

Due to various issues with practical implementation, German Federal Ministry of Finance on June 30, 2020 issued a circular providing guidance, how to handle the transition to the reduced VAT rate in a practically manner. With regard to the end of reduced VAT rate on January 1, 2021 German Federal Ministry of Finance issued a second circular providing guidance, how to handle the return to the VAT rates of 19% and 7%.

Please find a summary of selected guidance made by the circulars dated June 30, 2020 and November 4, 2020 here.