Reduction of VAT on fuel. “Die Welt”: Poland is breaking EU law

“Russia’s attack on Ukraine has refuted many certainties, both geopolitical and concerning energy and climate policy. Politicians are reacting to the sharp rise in the prices of oil, gasoline and other carriers with previously unthinkable decisions,” he writes on Wednesday, March 22, in the daily “Die Welt” Tobias Kaiser. The Brussels newspaper commentator cites as examples Belgium’s ten-year extension from nuclear power, as well as the continuing discussion in Europe on reducing VAT on petrol and diesel.

Germany is considering a reduction in fuel charges

The German government also wants to help drivers by lowering fuel charges, e.g. through the planned introduction of gas discounts, added to bills directly at gas stations. This solution is supported by the Federal Minister of Finance, Christian Lindner. At the same time, he rejects the VAT reduction because it is inconsistent with EU regulations. According to “Die Welt”, even the amendment to the regulations, which will come into force soon, allowing Member States to easier reduce the tax on gas and electricity without prior consultation with the EU, does not provide for any reductions in the VAT rate on fuel.

Poland’s decision to reduce VAT on fuel “a breakthrough in Europe”

“This is a taboo that the Polish government is consciously breaking,” writes Tobias Kaiser, recalling that in February this year. in Poland, the VAT on petrol and gas was lowered from 23 to 8 percent, and the tax on natural gas was completely abolished. According to Die Welt’s commentator, this decision may turn out to be groundbreaking in Europe and cause a domino effect. Similar solutions are already being discussed in other countries, incl. in Italy and gaining support in Germany as well. The newspaper quotes Markus Ferber, a German member of the European Parliament, who – aware of the inconsistency of such a decision with EU law – demands a reduction in VAT on fuel also in Germany. “However, I have the impression that the federal government does not want to reduce VAT and is willing to cover itself with Europe in this matter,” he writes. Ferber adds in the daily Die Welt that “in the current situation, it is impossible to even imagine opening an infringement procedure.”

Restrained reaction of the European Commission to Poland’s decision. In the background, the issue of money from the EU Reconstruction Fund

As noted by the newspaper commentator Tobias Kaiser, Poland has so far reacted restrainedly to the reduction of VAT on fuel. For the Polish government, which has been in a dispute with the EU for a long time over the controversial reform of the judiciary, the war in Ukraine and the enormous challenges that Poland faces with it may lead to a relaxation of relations and the payment of the first installment of the EU reconstruction fund, which Brussels has so far held it back – we read in “Die Welt”. At the same time, regarding fuel prices, the publicist proposes to introduce in Germany a solution chosen by Belgium and the Netherlands, which lowered the energy tax, i.e. the former tax on the consumption of mineral oils. “The relevant EU regulations allow for the possibility of applying tax exemptions and only define the minimum rate of these taxes” – concludes the author.