Tax relief for Swiss Post? Competitors see the black

Economic policy - Tax relief for Swiss Post? Competitors see the black

Following a proposed reform of the postal law, smaller competitors of the postal service in the letter business fear for their existence. "If the postal service receives such a large tax subsidy, it would be a killer for us," said Walther Otremba from the German Association of Mail Services (BBD) to the German Press Agency in Berlin on Thursday. 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 post office 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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1. The German Association of Mail Services in Berlin expressed concerns about the proposed reform in the Federal Ministry of Economics, fearing it would provide Swiss Post with a significant tax advantage.
2. The proposed change in the postal law would exempt the Post from sales tax in its corporate customer letter business, potentially making their services cheaper than their competitors'.
3. Walther Otremba, former State Secretary in the Federal Ministry of Finance and the Federal Ministry of Economics, criticized the proposed tax relief, stating it could lead to a loss of tax revenues and hinder competition.
4. If the postal service receives tax relief, smaller companies like Citipost, PostModern, and Pin AG would suffer, as they would still be required to charge sales tax.
5. According to Otremba, the federal government had previously estimated that scrapping the VAT exemption on company mail in 2010 would yield additional tax revenue of 300 million euros.
6. Otremba questioned the timing of the tax relief proposal, stating that forgoing such tax revenue in times of tight budgets was incomprehensible.
7. The reform proposal could potentially make the Postal Act more lenient for Swiss Post, as it is a universal service provider, and provision these tax benefits.
8. Economic policy experts and associations, such as the German Association of Mail Services, are closely monitoring this proposal, as it could significantly impact postal services and the mail business in Germany.

Source: www.stern.de