German Deutsche Post Might Start Paying VAT on Mail Deliveries 2008
German postal services group Deutsche Post AG could start paying value-added tax (VAT) for its courier, express and package services after the revocation of its exclusive licence on mail dispatching, German economic newspaper Wirtschaftsmagazin Euro reported on July 17, 2006, citing sources from the German Ministry of Finance.
Deutsche Post currently holds a monopoly on the dispatching of letters and catalogues of up to 50 grammes.
In May 2006, the German Government decided to revoke Deutsche Post’s monopoly at the end of 2007. The VAT-exempted status of Deutsche Post might also be scrapped, but no conclusive decision to that effect has yet been made.
VAT exemption is used only in cases where the companies render services in the public interest and offer universal postal services. This applies, for example, to the mail delivery service in far-off areas. Also companies outside the monopoly profit from the VAT exemption regulation.
The opening of the German mail market, whose volume is estimated at some 10 bln euro (12.52 bln USD), and the deregulation of mail markets in the UK, the Netherlands, Sweden and Finland is seen to open as many as 60 pct of the European sector for competition.
In the first quarter of 2006, Deutsche Post generated 57.4 pct of its 14.8 bln euro (18.53 bln USD) turnover abroad. The group expects the operating profit of its letter-dispatching unit to fall by between 10 pct and 20 pct from the lifting of the monopoly.
