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Temporary reduction of the general VAT rate - amended draft of the BMF-letter

25 June 2020

The Federal Ministry of Finance (BMF) published a second, revised version of the draft letter on the temporary reduction of German VAT rates on 23 June 2020.

As its most important change, the draft contains a simplification rule that gives entrepreneurs an extra month of time to change their processes for B2B transactions:

Entrepreneurs will still be able to charge 19% or 7% for the supply goods or services to other entrepreneurs in the period from 1 July to 31 July 2020. No invoice correction is necessary. The recipient of the goods or services can claim the VAT shown in these invoices as input tax, provided he is entitled to deduct input tax.

Further significant changes or additions pertain to
Information on intra-community acquisitions and services subject to reverse charge (§ 13b UStG)

  • Detailed explanations regarding the correction of invoices in relation to continuous supplies of services, i.e. clarification of the reference to § 31 UStDV
  • Additional comments relating to price reduction, refund vouchers and single-purpose vouchers
  • Incorporation of i.e. cooling energy and water deliveries as well as sewage disposal in the special provisions for utilities (unless organised on a sovereign basis)
  • Clarification on the refund of deposits for the period 1 January to 31 March 2021

This information is intended to give you a brief overview. The webinars taking place on 26 and 29 June 2020 will take into account the current draft version of the BMF letter.

Please do not hesitate to contact us. We are looking forward to answer your questions and support you with the practical implementation in your company.