20. November 2023

VAT in gastronomy back to 19%

The German food service industry is facing a significant change: from next year, VAT on food in restaurants and cafés will be increased from 7% to 19%. This decision, taken by the traffic light coalition, ends a temporary tax cut that was originally introduced in response to the coronavirus pandemic and the consequences of the war in Ukraine. The tax reduction, which has been in force since July 2020, has been extended several times, most recently until the end of 2023.

The reintroduction of the higher tax rate of 19% is causing considerable concern in the catering industry. Many fear a wave of plant closures, as the industry is already struggling with high energy and purchase prices as well as the lingering financial effects of the pandemic. These concerns are exacerbated by the fact that takeaway and supermarket food will continue to be taxed at only 7%, which could lead to distortions of competition.

A draft bill by the CDU/CSU parliamentary group, which provided for the permanent application of the reduced tax rate of 7% for meals in restaurants, was rejected in the Bundestag. This draft aimed to strengthen the competitiveness of the restaurant industry in the face of increasing burdens and to preserve the lively and diverse restaurant culture, especially in rural areas. However, the rejection of the draft has signaled that there is no new scope for distribution for the 2024 federal budget and that VAT will therefore return to the original rate of 19%