Deutsche Post will not lose tax break at start of 2010

[POSTMAN]

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FRANKFURT, Nov 14 (Reuters) Europe's biggest mail and express delivery company, Deutsche Post (DPWGn.DE), will not lose its German tax break privileges at the beginning of 2010, a spokesman for the German Finance Ministry said on Saturday.

The spokesman said that changes to the Post's legal tax status were not included in a draft bill designed to provide the country with an economic boost.

Heeding warnings by the European Union, the German government had already agreed to end Deutsche Post's VAT exemption at some point in 2010.

At the behest of the pro free market FDP party, Angela Merkle's ruling Christian Democrats had made it a part of their unified agenda with their coalition partners to remove the former monopoly's partial tax break as soon as possible.

The Finance Ministry spokesman said that the ministry had worked along with the German Economy Ministry in drafting the legislation which could go into effect early next year.

A spokeswoman for German Economics minister Rainer Bruederle said she could not give a specific date when the two parties plans for removing the tax break might be codified. She said, however, that this would take place as quickly as possible.

The spokeswoman said that an article in Die Welt which said the economy ministry and the Post had agreed on removing the tax break in mid-2010 was not correct.

Deutsche Post is the only postal service provider in Germany that is exempt from paying value-added tax, which German media has said gives the company a cost advantage of up to 500 million euros ($728.5 million) over rivals.