Germany to lower gas VAT to 7% to tackle rising prices

Gas rebate in Germany.

Faced with soaring prices triggered by the war in Ukraine, the German government has decided to temporarily lower the VAT on gas, from 19% to 7%, to help consumers, Chancellor Olaf Scholz announced on Thursday.

The rise in prices "is a major burden for many people", admitted the head of government in a brief statement to the press.

The reduced rate will remain in effect at least until the end of March 2024 and “we expect companies to pass this reduction on to customers 100%,” Scholz added to the press.

Companies will be able to request an additional exceptional levy of 2.4 centimes per kilowatt hour (KWh) of gas from individuals and companies.

600 euros per year

VAT included, this represents some 600 euros more per year for an average household with two children and a consumption of 20,000 kWh.

The Chancellor also reiterated the promise of a new aid package "to ease the pressure on individuals and businesses".

Germany has already put in place aid totaling 30 billion euros, including discounts at the pump or the popular 9-euro ticket, which allows travel on public transport and regional trains. for a month.

However, the measure stops at the end of August.

This announcement completes a series of measures requested by the government a few days earlier.

To cope with possible gas shortages, all public buildings will have to limit their heating to 19° this winter, German Economy Minister Robert Habeck announced on Friday.

In addition, historic buildings and monuments will no longer have to be lit at night, a measure that some German cities such as Berlin have already adopted.