Germany: VAT relief included in draft legislation (COVID-19)

Germany: VAT relief included in draft legislation

Measures being proposed in a draft legislation are intended to provide certain tax relief measures and enhanced liquidity in response to the coronavirus (COVID-19) pandemic.


Related content

The draft law includes two measures specifically concerning value added tax (VAT) relief:

  • First, the VAT rate for restaurant and catering services provided after 30 June 2020 and before 1 July 2021 (with the exception for drinks) would be reduced from 19% to 7%.
  • Second, the current transitional regulations with regard to § 2b German VAT Law (concerning new rules for certain “legal entities under public law”) to handle the COVID-19 pandemic would be extended until 31 December 2022.

In addition, a new § 27 (22a) UStG would allow flexibility in light of the COVID-19 implications and specifically would concern the timing of the transition rule application, given that a small number of “legal entities under public law” submitted a declaration before 2016 and have already carried out the necessary adjustment for 1 January 2021; these entities could begin with the application of § 2b UStG by making a corresponding “retraction” in 2020. In contrast, other “legal entities under public law” would be granted up to two more years for the adjustment period.

Read a May 2020 report [PDF 307 KB] prepared by the KPMG member firm in Germany.

Other recent VAT developments that may affect businesses in Germany include the following items:

  • Postponement of e-commerce rules until 1 July 2021 recommended (European Commission)
  • Subsidiary as a fixed establishment (CJEU, judgment of 7 May 2020 ‒ case C-547/18 ‒ Dong Yang Electronics)
  • Change to the basis of assessment in the case of “discounts in points” systems (BFH, decision of 16 January 2020, V R 42/17)
  • Changes to the input VAT refund procedure from 1 January 2020 (BMF, guidance of 7 May 2020 - III C 3 - S-7359 / 19 / 10010 :001)
  • VAT on the operation of a gaming machine (BFH, decision of 11 December 2019 – XI R 13/18)

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal