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German Lawmakers Reject VAT Cut On Rail Fares

by Ulrika Lomas, Tax-News.com, Brussels

06 December 2019


The upper house of the German parliament, the Bundesrat, has rejected certain tax elements of the Government's climate protection plan, including a reduction in value-added tax on long-distance rail travel.

Although the Bundesrat approved the Government's carbon pricing plan and an increase in tax on air fares on November 29, 2019, a proposal to reduce VAT on rail fares for journeys in excess of 50km from 19 to seven percent from 2020 was voted down due to concerns from the states, which are represented in the upper house, that they will be fiscally disadvantaged by the measure.

Currently, only rail fares for journeys of less than 50km qualify to be taxed at the seven percent reduced VAT rate, with the remainder taxed at 19 percent.

Other parts of the climate plan rejected by the Bundesrat included proposed tax breaks for household expenditure on emissions reductions works, and an increase in the allowance for commuters from EUR0.05 to EUR0.35 per kilometer from 2021.

The rejected parts of the climate plan are due to be discussed by a parliamentary mediation committee consisting of members of the lower and upper houses on December 9, 2019.

According to a Bundesrat statement, the joint committee should seek to "fundamentally revise" the climate protection legislation.

TAGS: environment | tax | value added tax (VAT) | travel and tourism | legislation | Germany | tax breaks | Other

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