Uniform tax rate of 7%
Previous legal situation:
Food consumed in a restaurant, a café or a bar is subject to 19% VAT.
However, for meals that the guest takes away or orders for home delivery, only 7% VAT generally applies.
Taxation of turnover in the restaurant sector from 1 July 2020:
Due to the current coronavirus crisis, a VAT rate of 7% is now to apply. According to the resolution, this applies from 1 July 2020 for a limited period of one year.
CSU leader Markus Söder said he would have preferred a longer duration for the reduction of the VAT rate for the restaurant sector, but stated that, given the course of the negotiations, he was nevertheless satisfied.
Frequently asked questions
Frequently asked questions
Which VAT rate applies to restaurant meals from 1 July 2020?
From 1 July 2020 to 30 June 2021, a reduced VAT rate of 7% applies to meals served in restaurants. This measure was adopted as part of the relief package addressing the COVID-19 crisis. Once the time limit expires, the standard VAT rate would generally apply again.
How were food items treated for VAT purposes before 1 July 2020?
Before 1 July 2020, food consumed on the premises – such as in a restaurant, café or bar – was subject to the standard VAT rate of 19%. Food for takeaway or home delivery, on the other hand, was generally taxed at the reduced rate of 7%.
Does the reduced VAT rate also apply to beverages in the hospitality sector?
No, the temporary reduction to 7% applies exclusively to food. Beverages remain subject to the standard VAT rate of 19%. Restaurant operators must therefore clearly separate food and beverage sales when issuing invoices.
How long is the VAT reduction on food limited to?
The reduction to 7% applies for a period of one year, namely from 1 July 2020 to 30 June 2021. The time limit was politically debated, and a longer period was demanded in some quarters; however, only this one-year period was initially adopted.
What do restaurateurs need to consider when switching to 7% VAT as of 1 July 2020?
Restaurateurs must adjust their POS systems and invoicing software so that food sales are shown at 7% instead of 19% from 1 July 2020. Particular care is required in separating food from beverages (which remain at 19%), as well as in correctly recording the transactions in the accounts and in the VAT pre-registration.