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Germany Advances Digital Payment Mandate to Tackle Tax Evasion

The coalition government plans to require businesses to offer at least one digital payment option, while maintaining cash, as part of efforts to modernize transactions and curb tax fraud.

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Overview

  • The German coalition government is finalizing plans to mandate that all businesses provide at least one digital payment option alongside cash.
  • The initiative aims to reduce tax evasion in cash-intensive sectors, which costs Germany an estimated €50–70 billion annually.
  • To address concerns from small businesses about implementation costs, the government is considering reducing VAT in the gastronomy sector to 7%.
  • Industry groups like the German Hotel and Restaurant Association warn of financial burdens on businesses, citing costs for card terminals and transaction fees.
  • The plan aligns with global trends, inspired by Greece's success in reducing tax fraud through mandatory card terminals, which led to an 82% drop in cash circulation.