The Monopolies Commission has warned that competition in the German letter market could collapse if Deutsche Post is allowed to retain its value-added tax (VAT) exemption.
"An exclusive VAT exemption for Deutsche Post's business customer letters would likely spell the end for most competitors," cautioned Tomaso Duso, head of the advisory panel, on Wednesday in Bonn. Such a privilege, he said, gives the former state monopoly a "massive competitive advantage." In the Commission's view, the exemption for Deutsche Post and certain other providers should be abolished. VAT in Germany is currently set at 19 percent. However, Thomas Held, chairman of Deutsche Post's central works council, warned against ending the tax privilege. "We fear that this could result in the loss of a five-digit number of jobs over the coming years," he told Reuters news agency.
DHL subsidiary Deutsche Post has previously rejected the Monopolies Commission's demands, arguing that they are "not compatible with relevant case law." The company is the only postal and parcel service provider in Germany to deliver the complex universal service--delivering mail nationwide with its own infrastructure, such as mailboxes--and therefore qualifies for the VAT exemption. "We still deliver to remote mountain pastures and isolated islands--not just to lucrative metropolitan areas," emphasized works council chief Held. The tax exemption for competitors has already had an impact. "As the central works council, we have indications that this has already cost 2,500 to 3,000 jobs this year alone."
The independent Monopolies Commission advises the federal government and lawmakers on competition policy, antitrust law, and regulation.
COMMISSION: FEDERAL GOVERNMENT SHOULD DIVEST DHL STAKE
The Monopolies Commission aims to promote competition to ensure "that Christmas cards will continue to be delivered in the future--even if Deutsche Post should eventually exit the letter business," said Duso. "That's why we need viable alternatives." In Denmark, for example, PostNord has announced it will end its letter business at the start of 2026, with a competitor taking over the service. As letter mail becomes less relevant in Germany as well, statutory requirements could also be relaxed to cut costs and foster greater competition. "Five delivery days per week are entirely sufficient," said Duso--meaning consumers would receive mail one day less per week. The Commission also takes issue with the federal government's stake in Deutsche Post's parent company DHL--held via the state development bank KfW at around 17 percent. This, the Commission says, creates conflicts of interest for the government and "should, in the Monopolies Commission's view, be ended."
The Federal Network Agency, as the postal market regulator, is also closely monitoring Deutsche Post. Complaints from consumers about the market leader's services have declined since peaking in the summer, said agency chief Klaus Müller. The agency continues to monitor the situation.
(Reporting by Matthias Inverardi, edited by . For inquiries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).
