Germany’s reducing VAT: Amazon confirms you need to change prices

To boost its pandemic-hit economy, Germany is reducing its main VAT rate from 19% to 16%.

The new rate will be effective from 1 July (Wednesday) and is likely to stay in place until December.

Brands selling goods online in Germany will need to adjust prices.

Germany’s second VAT rate that applies to the likes of food and public transport will also fall, from 7% to 5%, affecting grocery brands.

Amazon’s advice

While it’s tempting to use the cut to increase your margins or make your prices more competitive, the German government has pointed out that the VAT change will only have the desired effect if sellers pass on the reduction to consumers.

Amazon reiterates this, saying: “It is the aim of the German Government that retailers pass on the reduction to customers through lower prices.”

For Sellers, Amazon will not be automatically applying the VAT reduction, since uploaded prices are tax-inclusive.

If you’re a Vendor, you don’t have to do anything — Amazon will adjust the prices itself.

What you can do

Amazon offers various tools in Seller Central to help lower your prices: