German household gas prices to increase by 11% as reduced VAT expires – Verivox

German gas consumers will be hit by higher gas prices in April after a temporary value added tax (VAT) reduction expires at the end of March, Tagesspiegel Background reports. The government implemented the VAT reduction on natural gas deliveries and district heating from 19 to 7 percent in October 2022 following the gas price jump that resulted from Russia's war in Ukraine. The economy in particular was struggling due to high procurement costs for gas and electricity, writes Tagesspiegel Background. “The full VAT rate will suddenly increase the price of gas [for household consumers] by 11 percent,” said Thorsten Storck, energy expert at price comparison portal Verivox.

Kerstin Andreae, head of the German Association of Energy and Water Industries (BDEW), said the temporary reduction in VAT on gas and heat “was an important instrument during the energy crisis to relieve consumers.” This meant that a household in an average single-family home with an annual consumption of 20,000 kilowatt-hours of gas would saw savings of around 550 euros. However, thanks to the recent fall in energy prices, it was justifiable to now allow this relief instrument to expire, she added.

The overall situation in the energy markets has eased significantly, according to a spokeswoman for the federal economy ministry, who noted that electricity and gas costs had fallen back to lower levels than at peak times during the first year of the war, Tagesspiegel Background reported. “The prices for private households that concluded a new electricity or gas contract in the second half of 2023 are below those in the second half of 2021,” she added.

Private households in Germany paid an average of 11.41 cents per kilowatt-hour for natural gas in the second half of 2023, according to the Federal Statistical Office (Destatis). Gas prices fell by 6.9 percent compared to the first half of 2023. Compared to the second half of 2022, however, they were 22.2 percent higher. Compared to the second half of 2021, the comparable period before the war and the worsening energy crisis, gas prices for household customers were 67.1 percent higher.