From VAT reductions to pension inflations, something is changing in German regulation.
In this post I want to explain more about the new temporary and log-term changes, which are effective from today, the 1st of July 2020, onwards.
Temporary reduction of German VAT
As part of its stimulus package aimed to support the economy after the corona crisis, the German government has decided to introduce a temporary reduction of the German VAT.
Regular VAT is reduced from 19 to 16 percent, and reduced VAT from 7 to 5 percent. The federal government assumes the tax shortfalls amounting to almost 20 billion euros.
The reduced VAT rates come into effect from today, 1st of July 2020, until the 31 December 2020.
The more than 21 million pensioners in Germany can now enjoy a significant increase in their pensions.
From today onwards, pensions will increase by 3.45 percent in the west and 4.20 percent in the east of the country. With the current increase, the legally agreed east-west pension adjustment takes effect for the third time. In order to meet this goal, the pension adjustments in the east part of the country had to be higher than in the west part.
Minimum wages for caregivers
From July 1 onwards, caregivers in Germany can expect a slight boost in their minimum wage. The hourly salary will rise to 15 euros and it will go up again in April 2022, to 15.40 euros.
In addition to the statutory vacation entitlement, carers will also be given additional vacation: Five days this year and six days in 2021.
During the coronavirus crisis, the government instituted a protection against eviction policy to prevent renters in financial difficulties from losing their homes.
As of July 1, this temporary special protection will no longer apply.
The rent remained due for the corona period, however, an interest on arrears may arise. This must be paid by the end of this year.