Hermes mulls legal steps if German government extends VAT exemption for Deutsche Post

Hermes, a Hamburg-based logistics groups, is considering legal steps if the German Finance Ministry extends the VAT exemption for Deutsche Post World Net AG beyond 2007, its managing director Hanjo Schneider told Frankfurter Allgemeine Zeitung.

The tax exemption violates EU law, he said.

Deutsche Post enjoys an exemption from Germany’s 19 pct value-added tax in its letter and parcel services in return for its promise to deliver mail to every German household.

Without this advantage, Deutsche Post would have to raise its parcel prices ‘substantially’, Schneider said.

Hermes, which owns 29 pct in TNT NV’s TNT Post, moved some 50 mln parcels last year.

Schneider also criticized government plans to introduce minimum wages for postal workers.

If Deutsche Post’s wage agreement becomes a benchmark for the industry, the road into the letter market for new providers remains blocked, he said.