Appel says tax break loss is “unlawful”

A German parliament move to abolish tax break privileges for Deutsche Post is unlawful, the company’s chief executive said in an interview, reports Reuters. The article continues:

“We see the proposed legislation as being in contradiction with applicable European law,” Frank Appel told Focus magazine.

Germany’s lower house of parliament on Friday voted to end the exemption to Value Added Tax at Europe’s biggest mail and express delivery company, as demanded by the European Union.

Other companies offering postal services will also enjoy tax exemptions starting in July if they provide at least some general service such as continuous and comprehensive package delivery.

At the same time, many Deutsche Post services that up to now enjoyed favourable tax rates will have to apply full sales tax.

Germany’s upper house of parliament, the Bundesrat, has yet to approve the legislation.

In the magazine interview, Appel criticised the idea that comprehensive delivery services for retail and business customers would be taxed differently, and argued that under EU law these should generally be exempted from value added tax.

“Therefore, you also cannot make an exception for letter delivery services for business customers,” he said.

Appel also argued that under EU law, VAT should apply only to individually negotiated contracts, whereas the German parliament’s legislative proposal would apply to contracts based on general terms and conditions.

“That’s not in accordance with EU law,” he said.

Deutsche Post is the only postal service provider in Germany that is exempt from paying value added tax, which German media has said gives the company a cost advantage of up to 500m euros ($679m) over rivals.