In the context of the energy crisis caused by Russia’s war in Ukraine, the German government decided to reduce the value added tax (VAT) for gas consumers from 19% to 7%. German Chancellor Olaf Scholz, announcing this measure on Thursday, August 18, said that further concessions will be introduced for consumers in Germany in the near future.

The decision to reduce VAT for gas consumers is taken on the eve of the introduction of gas brands scheduled for October. The German government initially planned to reduce VAT only by this margin, but this turned out to be impossible due to instructions from the European Union. As a result, VAT had to be reduced on the entire amount associated with gas consumption in Germany.

The VAT reduction will work for as long as the margin charge on gas lasts, that is, at least until the end of March 2024. Olaf Scholz, however, noted that gas consumers in Germany will benefit from the reduced VAT much more than they will lose due to the margin.