German govt mulls extending Deutsche Post VAT exemption to competitors

The German government is considering extending Deutsche Post World Net AG’s exemption from VAT to all letter carriers in the country, as part of its plans to end the company’s monopoly on the market, Frankfurter Allgemeine Zeitung reported, citing government sources.

The move will increase the amount of tax revenue the government is losing from its current level, which is an estimated 300-500 mln eur a year, it said.

Deutsche Post is scheduled to lose its mail delivery monopoly for letters weighing up to 50 grams at the end of this year, with the EU seeking a continent-wide liberalization of the market in 2009.

The exemption from VAT will include all mailings up to 1,000 grams, the newspaper said today.

The government also hopes the exemption will help keep prices low after Deutsche Post’s monopoly expires, it said.