Germany will temporarily reduce the VAT on natural gas, from 19% to 7%, to try to ease the burden on households and companies, affected by the increase in energy costs and the imposition of a new tax on gas from October, reports Bloomberg, according to Agerpres.

Chancellor Olaf Scholz announced that the Executive expects suppliers to fully transfer the VAT reduction to consumers, the measure to be applied between October 2022 and March 2024.

“With this measure, we are overall reducing the burden on customers more than the burden created by the new gas tax. The VAT reduction will apply as long as the gas tax is collected,” he told journalists.

This week, the German government announced a new gas tax to help utilities cover the cost of replacing Russian supplies.

The tax will be imposed from October 1 and will remain in force until the end of March 2024. The level of the tax has been set at 2.419 Eurocents/kWh and will lead to an increase in energy bills for both companies and households.

The revenues obtained from the new gas tax will be used to compensate the additional costs incurred by gas importers, 12 of which have already requested compensation of approximately 34 billion euros, according to the Ministry of Economy.