The German value-added tax system knows two rates of taxation:

• The regular tax rate of 19% and
• The reduced tax rate of 7%.

Amongst others this reduced tax rate includes the delivery of forest and agricultural products, comestible goods and print media, and thus mainly serves a social function. Constant changes of these categories have lead to an increasing complexity of the system.

Due to these increasing difficulties and redundancies, the Bundesrechnungshof (German Federal Court of Auditors) has proposed a complete overhaul of the VAT system. The Bundesrechnungshof propositions include a list of future organisational models for tax rebate in the form of a briefing. Any of the reduced tax rate cases should be investigated individually and receive critical review.

There have been numerous Bundesrechnungshof reviews on the range of application of reduced tax rates, which lead to the only possible conclusion that a number of these largely venerated privileges are no longer objectively justifiable.