Anyone who regularly sends large volumes of business correspondence will be familiar with Deutsche Post’s attractive postage discounts for bulk mailers. Until now, these services have been exempt from VAT. That could soon come to an end, at least in certain areas.
What are the Federal Ministry for Economic Affairs’ plans?
The Federal Ministry for Economic Affairs and Climate Action has presented a draft bill to implement the case law of the European Court of Justice regarding the concept of the universal postal service. The crux of the proposed amendment is that so-called ‘partial services’ provided by Deutsche Post in the business letter segment will no longer be exempt from VAT.
What are ‘partial services’ in this context? This refers to specialised services for large-scale mailers, such as the dispatch of pre-sorted and bundled letter post, for which special volume discounts are offered. These services are not aimed at private individuals, but at businesses with high volumes of letter post.
Why is this change being made?
The catalyst is a judgement of the European Court of Justice dated 19 June 2025 (Case C‑785/23, Bulgarian Posts). In this judgement, the ECJ clarified what is meant by a universal service in the postal sector. Accordingly, universal services within the meaning of the European Postal Directive are only those services that meet the basic needs of the population. Special services tailored to the specific needs of commercial enterprises do not fall within this scope and therefore cannot be exempt from tax.
The VAT exemption for postal services in Germany is set out in Section 4(11b) of the Value Added Tax Act. This provision is also due to be amended in the draft Annual Tax Act 2026.
What does this mean for businesses?
For businesses that regularly send large volumes of letters via Deutsche Post and benefit from bulk-mailer discounts, the tax situation could change. In practical terms, this means that VAT would be payable on these partial services in future.
- Businesses that are entitled to deduct input VAT can, as a rule, claim the VAT payable as input VAT. For them, the change is likely to be largely neutral.
- Businesses with no or limited entitlement to deduct input VAT – such as insurance companies, doctors or certain charitable organisations – would, by contrast, face a higher actual cost burden.
At present, this is a draft bill. This means that the law has not yet been passed. However, the fact that it is linked to the Annual Tax Act 2026 indicates that its implementation is to be taken forward swiftly.
Background information for clients
Any business incurring high postage costs through bulk mailing contracts with Deutsche Post, and which is not entitled to deduct input VAT – or is only entitled to do so to a limited extent – should keep a close eye on further legislation. It is advisable to seek advice on the VAT implications in specific individual cases well in advance of the new regulations coming into force.
Source: Haufe: Tax
This article was created with the help of AI and has been editorially reviewed.
