FILE PHOTO: German Economy and Climate Minister and Vice Chancellor Robert Habeck visits a salt cavern facility of the gas trading company VNG AG during a two day tour under the heading of "Economy and work in times of crisis", due to Russia's invasion of Ukraine, in Bad Lauchstaedt, Germany July 28, 2022. REUTERS/Annegret Hilse/File Photo

Federal Minister of Economics Robert Habeck (Greens) demands that citizens should not be additionally burdened with VAT in the planned gas levy. “It would be wrong to charge VAT on the levy,” Habeck told the Tagesspiegel.

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“The surcharge is a difficult step, but it is necessary to ensure the gas supply. But it should not be additionally increased by value added tax,” emphasized the Vice Chancellor. “I am sure that the colleagues in the Ministry of Finance see it that way,” he said, referring to Finance Minister Christian Lindner (FDP). Legally, including under European law, this is complex. But he hopes that the Federal Ministry of Finance will find a way.

For a household of four, the levy can mean additional costs of up to 1000 euros – in addition to the price increases that are already possible in the contract with certain deadlines.

With 19 percent VAT, it would be significantly higher and the state would still earn through the tax revenue.

The exact amount of the surcharge is to be published in mid-August. It should be between 1.5 and five cents per kilowatt hour. According to the comparison portal Verivox, a kilowatt hour currently costs an average of around 26 cents, a year ago it was less than six cents.

The federal government is therefore looking for additional relief options. Habeck is now advancing.

According to the cabinet decision, the ordinance introducing the surcharge is expected to come into force in mid-August and take effect from October 1st.

It applies in accordance with the legal requirements of the Energy Security Act until 2024. With the levy, companies importing gas from Russia should be able to pass on 90 percent of the additional costs incurred by procuring gas from other sources.

The industry is under pressure because cheap gas supplies from Russia have been significantly reduced. Now the companies have to buy gas elsewhere on the fly for much more money in order to be able to serve their customers. This has put Germany’s largest gas importer Uniper in such trouble that the state has to invest billions.