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Germany: Temporary reduction of VAT rates (COVID-19)

Germany: Temporary reduction of VAT rates (COVID-19)

The coalition government in early June 2020 reached an agreement on an economic stimulus package, and agreed to a temporary decrease to the rates of value added tax (VAT).

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Under the measures—for the period from 1 July 2020 through 31 December 2020—the VAT standard rate is to be decreased to 16% (from 19%) and the VAT “reduced rate” to 5% (from 7%).

The stimulus package is in response to the economic challenges presented by the coronavirus (COVID-19) pandemic.

Read a June 2020 report [PDF 119 KB] prepared by the KPMG member firm in Germany

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