What you need to know about Deutsche Bahn's new reduced ticket prices

For years, consumers complained about Deutsche Bahn tickets becoming increasingly more expensive.

But this year everything will be different: On January 1st, the company lowered prices for long-distance travel by ten percent, as a spokesperson for Deutsche Bahn confirmed to dpa. 

This means that Deutsche Bahn tickets now have a lower value-added tax (VAT). The move is part of a government plan to incentive rail travel in hopes more people will pick planes over trains. 

READ ALSO: The big changes in Germany to expect in 2020

Here's what customers need to know. 

Which tickets will be cheaper? 

The fare reduction affects all long-distance journeys. It does not only apply to ordinary tickets, but also to special prices and additional cards, for example permitting bikes on board. 

For local transport, on the other hand, prices rose by an average of 1.7 percent. For example, Berlin’s S-Bahn - which is operated by Deutsche Bahn - saw single ticket prices for the whole region (ABC) rise from €3.40 to €3.60. 

What about my Bahncard?

Since the beginning of the year, the so-called "Bahncard 100" - or a regular priced ticket - has also been ten percent cheaper. However, this has not yet been applicable to Bahncards 50 and 25, for which customers pay only half and a quarter prices for tickets.

Deutsche Bahn holiday travellers. Photo: DPA

"Deutsche Bahn would welcome it if the BahnCard 25 and BahnCard 50 also became part of the VAT package," a rail spokesman told dpa. The company is currently in negotiations with the government about this.

“We are all confident that we will be able to resolve these small kinks that need to be resolved in the coming weeks and months," Bahn board member Ronald Pofalla said recently.

Should the negotiations be successful, Bahncard 50 and 25 would also become ten percent cheaper.

When can I book the cheaper tickets? 

According to Bahn, customers can now buy the cheaper tickets online and during regular opening hours in the travel centres.

Why are the tickets becoming cheaper now? 

The core reason is climate change. To ensure that more people travel by train instead of the more climate-damaging car or plane, the German government has decided to reduce the value added tax from 19 to seven percent for long-distance train tickets in its climate package.

Plane travel, on the other hand, will be becoming significantly more expensive starting in March. 

"We want to win over more rail customers“, said Transport Minister Andreas Scheuer (CSU) about the plans. The federally owned company expects an annual increase of at least five million passengers due to the reduction of the VAT alone. 

What will the result of the price reduction be?

A twelve percentage point reduction in VAT results in a ten percent reduction in fares. A calculation example: a €100 ticket costs €119 with a 19 percent VAT. With a seven percent tax it costs €107. The difference: €12. 

Does the lower VAT only apply to Deutsche Bahn?

It applies to all providers of long-distance rail transport, which is 99 percent controlled by Deutsche Bahn. Long-distance buses are excluded from the VAT package.

Above all, the largest long-distance bus company in Germany, Flixmobility with its brand Flixbus, has criticized the reduction, and announced it will take legal action.