08.04.23

Bavaria proposal to abolish VAT on all food  

Dissimilar to many of its counterparts across the continent, Germany operates a Feudal System, where, for the most part, Feudal States maintain a distinct sense of autonomy in the conducting of their tax affairs. This looks set to change with the introduction of Germany’s B2B e-invoicing mandate. 

However, VAT rates are still currently determined on a Federal, rather than nationwide, level. Bavaria is a good example of this, proposing a zero VAT on all basic food products. Its proposal follows the path of nearing countries Poland and Spain, who have proposed and implemented similar initiatives this year.  

The proposal precedes elections in Bavaria, indicating how fiscal policies are linked to wider political agendas, and how fiscal policies can play a pivotal role in influencing resident votes. 

Germany is a critical market for Kofax. We are closely following tax rate changes in the country, alongside the upcoming B2B mandate. You can read more about Germany’s e-invoicing mandate here.