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Risks Group Management Report
Deutsche Post World Net Annual Report 2007
tions under the price cap procedure for mail prices requiring approval. is stipulates
the general rate of in ation and the expected productivity growth rate for Deutsche
Post AG as the key factors applicable to mail prices. Prices have to be lowered if the
in ation rate in the reference period is less than the productivity growth rate speci-
ed by the regulatory authority. No price cuts are required in 2008, allowing the mail
prices requiring approval to remain unchanged. e regulatory authority accepted
an application from Deutsche Post AG to this e ect on 20 November 2007.
On 18 October 2006, the European Commission presented its proposal for a third
Postal Directive and recommended opening the EU postal markets fully to competi-
tion starting in January 2009. e European Parliament and Council have begun
consultations on the proposal under the EU co-decision procedure. In a rst hearing
on 11 July 2007, the European Parliament came out in favour of fully opening the EU
markets by 1 January 2011 – later than in the Commission proposal – and of granting
certain member states a transitional period until 1 January 2013. e Council adopted
its common position on 8 November, in which it endorsed the European Parliament’s
proposed date for market opening. e European legislative procedure continues.
Whilst liberalisation of postal markets entails risks for Deutsche Post AG due to
increased competition in Germany, it also opens up new opportunities in other
European mail markets.
In 2007, cross-border mail in Europe between Deutsche Post AG and een other
western European postal operators was governed by the REIMS II agreement and with
another nine eastern European postal companies by the REIMS EAST agreement. e
postal operators are currently negotiating a new agreement called REIMS III, which
is to come into force with retroactive e ect from 1 January 2008 and replace the
REIMS II and REIMS EAST agreements.
Discussions continue regarding the extent to which postal services should be exempt
from value-added tax (VAT). In correspondence dated 10 April 2006, the European
Commission initiated infringement proceedings against the Federal Republic of
Germany with regard to the VAT exemption of postal universal services provided by
Deutsche Post AG. Germany considers the current VAT exemption to be in compli-
ance with applicable law and responded to the European Commission accordingly.
On 24 July 2007, the Commission announced in its decision on the proceedings that
the VAT exemption for postal universal services provided by Deutsche Post AG was
too far-reaching and called on the German government to amend the applicable
law. Independently of these infringement proceedings, the German government