065. VAT Treatment Of Multifunction Telephone Cards

KPMG Germany Webpage
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1. END OF TAX EXEMPTION FOR SERVICES OF DEUTSCHE TELEKOM

The tax exemption for certain services of Deutsche Telekom AG under sec. 4 no. 11a UStG (German VAT law) expired at the end of 1995. As a result, the telecommunication services of Deutsche Telekom have been fully subject to VAT since 1 January 1996.

2. SALE OF TELEPHONE CARDS

For a number of years, Deutsche Telekom and its predecessor in interest, Deutsche Bundespost, have been selling electronic telephone cards which can be inserted in public telephones in Germany to pay for telephone calls. Card telephones have in the meantime largely replaced coin telephones in Germany. The card telephones automatically (without operator assistance) calculate the cost of each telephone call, whether domestic or international, and debit this amount from the original value of the card, which is somewhat in excess of the price printed on