German VAT cut transition rules

The German Finance Ministry has issued guidance on the tranisiont for the temporary VAT rate cut from 19% to 16% from 1 July until the end of 2020. The reduced VAT rate is also to be cut from 7% to 5%. Restaurant, café and other catering services will enjoy a VAT rate cut from 7% to 5% between 1 July 2020 and 30 June 2021.

The rate change comes into force on 1 July 2020 for all taxable supplies, including intra-community supplies. There is a 1-month soft-landing in July for B2B invoices – see below.