The German government has decided to reduce VAT rates temporarily as part of its economic stimulus package. The changes at a glance:
- The standard VAT rate will be reduced from 19% to 16%, and the reduced rate from 7% to 5%.
- The new VAT rates will come into force on 1/7/2020 and apply for a limited period until 31/12/2020.
The new tax rates must also be considered on retailers’ invoices. This also applies to online traders in the EU who send goods to Germany. Entrepreneurs must adapt their shops or ERP systems. This is a massive effort for retailers and will result in financial losses if implemented incorrectly.
ClearVAT automatically maintains adjustments such as these via its VAT engine and dynamically makes them available to online merchants. This automated updating saves retailers from having to make manual changes. But it is not only the six-monthly special regulations that must be considered for cross-border trading. The VAT Engine knows the tax rates for more than 450,000 products, including exceptions and regional specifics in all 27 EU countries.