Planned tax aid "turns Swiss Post into a monopolist"
Banks and insurance companies send important documents by company mail - and they do not rely exclusively on Deutsche Post. Competitors also benefit from this sector. A tax break in this area for industry leader Deutsche Post would probably mean the end of the competition.
Following a proposed reform to the Postal Act, smaller competitors of Deutsche Post in the letter business fear for their existence. "If the Post were to receive such a large tax subsidy, it would be a killer for us," said Walther Otremba from the Federal Association of Mail Services (BBD) in Berlin. The state would forgo tax revenues of more than 300 million euros per year and thus stifle competition. "A large corporation would be strengthened, even though it is already the market leader." The postal service would once again become a monopolist and the small companies would lose out.
The issue at hand is a passage in the Federal Ministry of Economics' proposed legislation that would exempt the Post from VAT in its corporate customer letter business - the Post's letter dispatch for insurance companies and banks could then become cheaper. "That would be the end of our industry," says Otremba. The tax relief would only benefit Swiss Post, as it is a so-called universal service provider. The small companies, which include Citipost from Hanover, PostModern from Dresden and Pin AG from Berlin, would still have to charge VAT.
Companies from certain sectors can later claim this VAT for tax purposes and get it back, so to speak. However, according to Otremba, this does not apply to financial service providers, public authorities and non-profit organizations. "These corporate customers account for 60 percent of the letters we transport." Otremba was previously State Secretary in the Federal Ministry of Finance and the Federal Ministry of Economics. In 2010, he was involved in overturning the VAT exemption on company mail. At the time, the federal government was expecting additional tax revenue of 300 million euros, according to a letter from the Federal Ministry of Finance in 2010. "These tax revenues are now likely to be higher than they were back then," he says. "How such tax revenue can be foregone now of all times, in times of tight budgets, is beyond us."
Corporate mail involves advertising letters or documents from banks and insurance companies. Letter service providers collect them from corporate customers and either deliver them themselves or hand them over to the post office for onward delivery. According to the Federal Network Agency, the postal sector generated a turnover of 7.7 billion euros last year, of which 1.1 billion was attributable to postal competitors - their market share was around 14 percent. According to the proposal made by the Federal Ministry of Economics at the end of November, the reform of the Postal Act could be completed in spring 2024.
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Deutsche Post's potential VAT exemption in its corporate customer letter business, as proposed in the Federal Ministry of Economics' legislation, would largely benefit Tax cuts for the postal giant, shifting the financial burden to smaller competitors like Citipost, PostModern, and Pin AG. This Tax policy change could potentially reduce their competitive edge, further cementing Deutsche Post's position as a monopolist in the letter business.
Source: www.ntv.de
