The temporary reduction of the German VAT rates will end soon
The temporary reduction of the German VAT rates (currently 16% and 5%) were introduced as part of a huge stimulus package aimed at reducing the economic impact of the COVID-19 pandemic and boosting domestic demand. The reduced VAT rates came into effect on 1 July 2020 for six months. Thus, this measure will end on 31 December 2020.
As of 1 January 2021 the “old” VAT rates (19% and 7%) will once again apply. So, for supplies of goods and services having their time of supply after 31 December 2021 the “old” VAT rates will be applicable.
Entrepreneurs should be prepared for this change in VAT rates and have their ERP-systems ready.