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How tickets for long-distance trains in Germany could become much cheaper

Germany's Transport Minister Andreas Scheuer wants to make long-distance train tickects cheaper by reducing the tax on them.

Published: 17 April 2019 08:25 CEST
How tickets for long-distance trains in Germany could become much cheaper
File photo shows an Intercity-Express (ICE) train in Frankfurt. Photo: DPA

By cutting the value added tax, the centre-right Christian Socialist (CSU) politician hopes it will encourage more people to travel by train.

SEE ALSO: How Deutsche Bahn plans to improve its service and staffing in 2019

He told German daily Bild on Wednesday that the number of long-distance train passengers using the state-owned railway operator Deutsche Bahn (DB) was expected to top 150 million this year for the first time.

Scheuer said that to ensure rail travel can remain an attractive option, the tax on tickets should be slashed.

He said: “In order to continue along this path and make Deutsche Bahn even more attractive, we also need to reduce the value-added tax on long-distance rail transport tickets from 19 to 7 percent.”

“This will reduce the burden on long-distance rail passengers by up to €400 million a year.”

The cost of train travel in Germany varies hugely, depending on when customers purchase their ticket and what kind of ticket they buy.

A Sparpreis (saver ticket) is a cheaper ticket with no flexibility, whereas Flexpreis is more expensive, valid for any train on the day of travel and passengers can cancel the ticket for free.

Deutsche Bahn has a Sparpreis finder tool on their website for finding cheaper tickets.

Move is to protect the climate

Scheuer said the idea is to address climate change and encourage greener forms of transport.

“Anyone who is serious about climate protection and switching from cars or planes to rail must start with the tax,” he said.

Transport Minister Andreas Scheuer wants to cut the VAT on long-distance train tickets. Photo: DPA

SEE ALSO: Everything you need to know about travelling by train in Germany

In the past, the Green party in Germany has repeatedly called for a reduction in value-added tax on long-distance train tickets. The lower VAT rate of seven percent already applies to local public transport.

The minister said people in Germany are already choosing to travel by train instead of flying for domestic journeys.

SEE ALSO: Deutsche Bahn raising prices, adding new routes

Passenger numbers have doubled in recent years on the Berlin-Munich ICE line, he said, indicating that more people are choosing to take the train instead of flying.

“Virtually nobody flies between Hamburg and Berlin anymore, because the rail connection is attractive,” Scheuer added.

The minister said cutting VAT on train tickets was the way to move forward in the climate protection fight, rather than introducing prohibitive measures like diesel bans.

“That is the way I want to go – instead of bans, speed limits or increasing the cost of mobility,” Scheuer said. “Prohibiting, raising prices and demonizing is the wrong way.”

Scheuer has been accused by the opposition in the past of not doing enough for climate protection.

But he rejected criticism, calling it “nonsense”. He then went on to reference plans to present  an electromobility law package, which will define benefits for electric vehicles to encourage a shift away from cars that use traditional fuels.

SEE ALSO: 140,000 Deutsche Bahn trains never reached their destination last year

Eco-friendly train travel to continue

Some 148 million passengers used DB long distance trains in 2018. That was a year-on-year increase of 5.7 million or 4 percent – and a new record.

DB said at the end of March that it expects the trend towards eco-friendly rail transport to continue. “We will be transporting over 150 million long distance passengers in 2019 for the first time,” said Dr. Richard Lutz, the CEO of Deutsche Bahn,

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TAXES

Beskæftigelsesfradraget: What is Denmark’s employment allowance?

Denmark's government may soon announce changes to its tax reform plans, which will give all wage earners a bigger employment allowance. What is this and how will it affect foreigners' earnings?

Published: 30 October 2023 15:21 CET
Beskæftigelsesfradraget: What is Denmark's employment allowance?

What is the employment allowance? 

The Beskæftigelsesfradraget (from beskæftigelse, meaning employment, and fradrag, meaning rebate) was brought in by the centre-right Liberal Party back in 2004, the idea being that it would incentivise people to get off welfare and into a job.

Everyone whose employer pays Denmark’s 8 percent AM-bidrag, or arbejdsmarkedsbidrag, automatically receives beskæftigelsesfradraget. Unlike with some of Denmark’s tax rebates, there is no need to apply. The Danish Tax Agency simply exempts the first portion of your earnings from income taxes. 

In 2022, beskæftigelsesfradraget was set at 10.65 percent of income with a maximum rebate of 44,800 kroner. 

How did the government agree to change the employment allowance in its coalition deal? 

In Responsibility for Denmark, the coalition agreement between the Social Democrats, the Liberals and the Moderate Party, the new government said it would set aside 5 billion kroner for tax reforms.

Of this, 4 billion kroner was earmarked for increasing the employment allowance, with a further 0.3 billion going towards increasing an additional employment allowance for single parents.

According to the public broadcaster DR, the expectation was that this would increase the standard employment  allowance to 12.75 percent up to a maximum rebate of 53,600 kroner. 

How might this be further increased, according to Børsen? 

According to a report in the Børsen newspaper, the government now plans to set aside a further 1.75 billion kroner for tax reforms, of which nearly half — about 800 million kroner — will go towards a further increase to the employment allowance. 

The Danish Chamber of Commerce earlier this month released an analysis in which it argued that by raising removing all limits on the rebate for single parents and raising the maximum rebate for everone else by 20,300 kroner, the government could increase the labour supply by 4,850 people, more than double the 1,500 envisaged in the government agreement. 

According to the Børsen, the government estimates that its new extended allowance will increase the labour supply by 5,150 people.  

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