Deutsche Post faces legal challenge over German VAT exemption

A member of Germany’s Federation of Postal, Courier and Express Services (BdKEP) is taking legal action over Deutsche Post’s exemption from national sales tax. The BdKEP said its unnamed member had filed a lawsuit in the Tax Court in Cologne against the Federal Central Office, which decides which agency provides universal postal service in Germany, and is therefore exempt from VAT.

Since autumn 2010, the Federal Central Tax Office has interpreted the country’s Postal Universal Service Ordinance to the effect that a company must not only provide postal services across the whole of Germany in order to qualify as a universal service provider, but also it must own at least 12,000 retail branches.

The BdKEP has long been opposed to the interpretation revised under EU regulations, saying it is essentially a “backdoor” postal monopoly within what is supposed to be a liberalised postal market in Germany.

It said on Monday that the current interpretation was “idiosyncratic”, and an interpretation of the law “tailored” for the benefit of Deutsche Post alone.

The lawsuit essentially seeks clarification over when a company can be said to be providing a universal postal service in Germany – and therefore is exempt from VAT.

The Federation said the lawsuit suggests more than one postal company could be said to be providing a universal service if they are working in partnership.

BdKEP chairman Rudolf Pfeiffer said: “The dispute before the Tax Court will be whether the entire postal system providing universal services should be taken to include only those 12,000 collection points.

“The dispute is also a matter of whether coverage cannot be achieved through co-operation, as required by the sales tax law for postal services,” added the BdKEP.