July 2020: 9 changes affecting expats in Germany
From VAT reductions to pension inflations, a lot is changing in July 2020 - and not all of it is corona-related. Here’s what expats in Germany should know about.
1. VAT reduced from July 1
A constituent part of the federal government’s coronavirus stimulus package was the decision to slash VAT (Value Added Tax, a business tax known as Mehrwertsteuer in Germany) from July 2020 until the end of the year. The standard rate will be reduced from 19 percent to 16 percent. The reduced rate, added to food and other everyday items, will sink from 7 to 5 percent.
The VAT reduction should drive consumer spending by reducing prices in supermarkets, furniture shops, electronics stores and car dealerships. According to the Federal Statistical Office, consumer prices would drop by around 1,6 percent if retailers passed the entirety of the saving onto customers - as some have said they will - but the actual effects are difficult to predict.
2. Train travel gets cheaper
Deutsche Bahn, for one, will pass the VAT reduction onto passengers in its entirety. Tickets for long-distance trains will therefore be 1,9 percent cheaper from July 1 onwards. The change applies to flex, saver and super saver tickets, until the end of the year. Note, however, that the change doesn’t apply to regional transportation, since that would require a much more complex coordination process with around 50 transport associations.
3. Pensions increase in western and eastern Germany
Approximately 21 million pensioners in Germany can look forward to significantly more money from July 1 onwards. As part of the annual pension adjustment, pension benefits will increase by 3,45 percent in western Germany and 4,20 percent in eastern Germany.
It might be the last increase for a while, however: since last week the Deutsche Rentenversicherung said it was unlikely that pensions would increase next year, with the coronavirus crisis putting continued pressure on the German job market. It seems likely that average incomes will fall, as well as the overall number of contributors. Since Germany operates on a pay-as-you-go pension system, this will squeeze pension finances.
4. Tenant protection expires on July 1
To protect renters in Germany during the coronavirus crisis, the government instituted a protection against eviction policy to prevent anyone experiencing financial difficulties from losing their home. Over the past three months, tenants have been safe from the threat of termination if they fell behind on their rent. However, this protection ends at the end of June - potentially leaving a number of renters in a difficult financial situation.
5. Higher minimum wage for caregivers
From July 1 onwards, carers in Germany can expect a slight boost in their hourly salary. The uniform minimum wage will rise to 15 euros; it will go up again in April 2022, to 15,40 euros. In addition to the statutory vacation entitlement, carers will also be given extra holiday leave: five days this year and six days in 2021.
6. Twice-weekly coronavirus tests in slaughterhouses in NRW
Following the well-publicised mass coronavirus outbreak at the Tönnies slaughterhouse in North Rhine-Westphalia, the meat industry is making some changes. From July 1 onwards, workers in the western federal state will be tested for coronavirus at least twice a week, at the company’s expense. The new requirement applies to slaughterhouses, meat cutting plants and processing companies with more than 100 employees.
7. Relaxation of EU entry ban
From the beginning of July onwards, restrictions on travel into the EU bloc from so-called third countries will gradually be relaxed. The EU has released its list of “safe countries” with negligible coronavirus infection rates, whose citizens will be permitted to travel to Europe from July 1 - as long as reciprocal arrangements can be worked out.
8. More protection for cyclists
To further protect cyclists on Germany’s roads, from July 1 onwards, all new long trucks will have to be fitted with turning assistants and flashing side markers - both of which help prevent serious accidents involving cyclists at intersections. Old long trucks (between 18,75 and 25,25 metres) must be retrofitted by July 1, 2022.
9. Truck driving ban during holiday season
The start of the summer holidays in Germany also means the start of the holiday travel ordinance. During the summer months, the ban on driving heavy goods vehicles on Sundays and public holidays is extended to include Saturdays.
From July 1 to August 31, trucks with a gross weight of more than 7,5 tons (including trailers) are not permitted to drive on certain sections of the Autobahn on Saturdays between 7 am and 8 pm.