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Cross-border trade and German VAT reduction endanger retail giants

Daria Shamonova
July 13th, 2020


This article is more than 4 years old.

Purchasing goods across the border with Germany will soon reach pre-coronavirus levels. Danish companies are asking the government to apply measures to help them

Each year, Danes spend around four billion kroner outside of the south border (photo: pixabay)

When countries locked down due to the coronavirus, Danes were unable to cross borders to buy cheap sodas, sweets and alcohol in Germany. According to TV2, this helped boost sales of retail giants Salling Group and Coop. In southern Denmark alone, Coop’s sales have grown by 32 percent.

However, cross-border trade has slowly started to resume and so retail stores are about to lose the extra profit.

The situation is also complicated by Germany’s temporary VAT reduction meant to stimulate its economy. The country’s VAT has been reduced from 19 to 16 percent while food production VAT has been cut from 7 to 5 percent.

Levelling the playing field
For this reason, both Coop and Salling Group are now asking the Danish government to apply special measures to level the playing field.

Per Bank, the CEO of Salling Group, told TV2: “It is important to reduce VAT because right now we are facing 5 percent food production VAT in Germany and 25 percent general VAT in Denmark.”

The government has previously rejected Venstre’s proposal to halve VAT in Denmark for the rest of the year.

Popular activity
“For 25 years we have been trying to make it work. Maybe we should just lower the tax on beers and sodas. As we have seen before, it works when we do it,” Venstre MP Hans Christian Schmidt told DR.

For now, going to another country in order to buy some sodas and alcohol seems to be a popular activity among people in Denmark.

According to the Danish Chamber of Commerce’s survey, around 45 percent of citizens take a trip to the border stores at least once a year. It results in losses amounting to billions of kroner in taxes and duties.


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A survey carried out by Megafon for TV2 has found that 71 percent of parents have handed over children to daycare in spite of them being sick.

Moreover, 21 percent of those surveyed admitted to medicating their kids with paracetamol, such as Panodil, before sending them to school.

The FOLA parents’ organisation is shocked by the findings.

“I think it is absolutely crazy. It simply cannot be that a child goes to school sick and plays with lots of other children. Then we are faced with the fact that they will infect the whole institution,” said FOLA chair Signe Nielsen.

Pill pushers
At the Børnehuset daycare institution in Silkeborg a meeting was called where parents were implored not to bring their sick children to school.

At Børnehuset there are fears that parents prefer to pack their kids off with a pill without informing teachers.

“We occasionally have children who that they have had a pill for breakfast,” said headteacher Susanne Bødker. “You might think that it is a Panodil more than a vitamin pill, if it is a child who has just been sick, for example.”

Parents sick and tired
Parents, when confronted, often cite pressure at work as a reason for not being able to stay at home with their children.

Many declare that they simply cannot take another day off, as they are afraid of being fired.

Allan Randrup Thomsen, a professor of virology at KU, has heavily criticised the parents’ actions, describing the current situation as a “vicious circle”.

“It promotes the spread of viruses, and it adds momentum to a cycle where parents are pressured by high levels of sick-leave. If they then choose to send the children to daycare while they are still recovering, they keep the epidemic going in daycares, and this in turn puts a greater burden on the parents.”