German financial authorities decide on VAT payment for Deutsche Post DHL
The German financial authorities have issued a notice of assessment to Deutsche Post DHL that will result in an additional VAT payment of Euro 516 million. The decision is the result of a comprehensive review of complex tax issues and covers the period from 1998 until when the revised VAT law for postal services came into force on 1 July 2010. A large part of the additional payment amount relates to tax issues, for which the Group had already partially formed reserves. In addition the financial authorities had retrospectively examined several postal services for tax liability, which were previously exempt from VAT.
To implement the authority’s decision the company will make a one-time payment of Euro 516 million in the third quarter of 2012. As the company had already formed reserves in previous years, Group EBIT in the second quarter of 2012 will be impacted by Euro 180 million. The impact on net profit is expected to be Euro 265 million. Taking into account these effects, the Group is fully confirming its previous guidance for the full year.
Although many facts allow different interpretations in the application of EU and German VAT law on postal services, the Group will accept the decision taken to establish legal certainty and avoid years of legal battles with uncertain outcomes.
Source: Deutsche Post DHL
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