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German finance minister Christian Lindner has written to the European Commission, asking it to remove the VAT on the gas tariff for a limited period of time. The German gas market operator will today announce the tax, which Berlin is imposing on all gas consumers to spread the extra import cost.
The tax is intended to help Uniper and other importers cope with rising prices due to reduced Russian export flows, but would add to already high energy prices and inflationary pressures on customers.
Under EU VAT law on energy products, the tax is considered a component of the overall gas price, meaning it is mandatory, so Germany must seek permission from Brussels to remove it.
Lindner said that while he was asking on behalf of Germany, he was effectively asking for a change to the VAT law that would give all member states the temporary option to make similar moves.
The letter said Germany would formally apply to the EC later, but he wanted to appeal to Brussels first to convince authorities that policymakers were concerned about the difficulties and potential discontent.
"VAT for taxes imposed by the government raises prices and is met with increasing opposition from the population, especially in the current emergency situation," he said.
Russia has since mid-June drastically cut flows to Europe via the Nord Stream 1 pipeline and currently supplies only 20% of agreed volumes, blaming faulty and delayed equipment, while Europe says the decision is politically motivated.
Source: Euroactiv