Lindner’s letter to Brussels on the exemption from VAT on the natural gas tax

German Finance Minister Christian Lindner has written to the European Commission asking for permission to waive value added tax on a new levy on the price of natural gas for a limited time, according to a copy of his letter seen by Reuters.

Germany’s natural gas market operator is due to announce on Monday the amount of the levy, which Berlin imposes on all natural gas consumers to share the additional cost of natural gas imports.

The levy is intended to help Uniper and other importers cope with price spikes due to reduced Russian export flows, but will add to already skyrocketing energy prices and inflationary pressures for customers.

Under EU VAT legislation on energy products, the levy is considered a component of the overall price of natural gas, which essentially means it is mandatory, which is why Germany must seek permission from Brussels to impose it. abolish.

Mr Lindner said that while he was asking on behalf of Germany, he was essentially asking for a change in VAT legislation which would give all member states the temporary ability to make similar moves.

Lindner’s English-language letter, dated Aug. 12, said Germany would submit a formal request to the European Commission later, but wanted to approach Brussels first to convince authorities that policymakers are concerned about potential difficulties and resentment.

“Government-imposed levy VAT raises prices and is facing more and more backlash from the population, especially in the current state of emergency,” he said.

“However, popular acceptance of tax laws is crucial to their enforcement,” he said.

Russia has since mid-June drastically reduced flows to Europe through the Nord Stream 1 pipeline and is now providing just 20% of agreed quantities, blaming faulty and delayed equipment, a move Europe says is politically motivated.

Utilities – wedged between importers and squeezed end consumers – fear being saddled with unaffordable costs.

“Rising energy prices are a threat to our prosperity and stability,” Lindner said.

The government so far expects a levy of between 1.5-5.0 euro cents per kilowatt-hour (kWh) from consumers to pay 90% of the higher wholesale gas costs, plus another unspecified levy for gas storage which will be published on August 18.