Help for German households in the face of soaring energy prices. The government has decided to temporarily lower the VAT on gas, from 19% to 7%, to help consumers, the German Chancellor announced on Thursday 18 August. This reduced rate will remain in effect at least until the end of March 2024 and “we expect companies to pass this decline 100% on to customers”added Olaf Scholz.
This announcement comes at a time when bills will still increase significantly from October 1, the date on which gas distributors will be authorized to pass on the increase in purchase prices to customers. Companies will thus be able to request an additional exceptional levy of 2.4 centimes per kilowatt hour (KWh) of gas from individuals and companies.
Towards a new aid package
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 coalition government was seeking to exempt this levy entirely from VAT, a measure refused by the European Commission. Berlin has therefore decided to lower the tax on all gas consumption, which “relieves consumers more” what the exceptional levy costs, assured Olaf Scholz.
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 9-euro ticket, which allows public transport until the end of August. and regional trains for a month.