Germany faces EC fines over VAT ban

29 March 2001
Germany faces EC fines over VAT ban

A tough line imposed on German business travellers who seek to deduct VAT from food and accommodation expenses on business trips has landed Berlin in trouble with the EC.

In 1999, the German government banned the deduction of VAT from restaurant and hotel bills incurred during business travel, but the EC claims that this was a breach of the EU's sixth VAT directive.

The Commission has threatened Germany with legal action at the European Court of Justice. If Brussels does not receive a satisfactory response by 1 May, it is likely to launch legal proceedings.

The action could force the German government to liberalise its law, or face being ordered to pay daily-recurring fines, possibly of €100,000 (£63,000), until the country falls into line with European law.

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