Additional measure:
7% on food, limited until 30 June 2021
Hospitality businesses have been particularly affected by the coronavirus crisis. Once the currently required restrictions are eased and restaurants, cafés and other hospitality businesses can resume operations, they should be able to get back on their feet quickly. For this reason, the VAT rate on food in the hospitality sector will be reduced to the reduced rate of 7% from 1 July 2020, limited until 30 June 2021. It is important that this measure is time-limited, as it is intended as a boost for the period after the crisis, enabling hospitality businesses to operate under their own steam again as quickly as possible. The corresponding statutory provision is part of the Corona Tax Assistance Act (Corona-Steuerhilfegesetz), which was adopted by the Federal Cabinet on 6 May.
Frequently asked questions
Frequently asked questions
Which VAT rate applies to food in the hospitality sector from 1 July 2020?
For food served in the hospitality sector, the VAT rate is reduced from the standard rate of 19% to the reduced rate of 7%. This provision applies from 1 July 2020 and is part of the Corona Tax Relief Act, adopted by the Federal Cabinet on 6 May 2020.
How long does the reduced VAT rate of 7% on restaurant meals apply?
The reduction of the VAT rate to 7% on food served in the hospitality sector is limited until 30 June 2021. From 1 July 2021, the regular tax rate will generally apply again. The time limit was deliberately chosen, as the measure is intended as a temporary stimulus following the coronavirus crisis.
Why was the reduced VAT rate for restaurants and food service businesses introduced?
Restaurants, cafés, and similar food service businesses have been hit especially hard by the COVID-19 crisis, in part due to official restrictions on their operations. The reduced VAT rate is intended as a kick-start measure, enabling these businesses to quickly return to operating on their own once restrictions are eased.
Does the reduced VAT rate of 7% also apply to beverages in the hospitality sector?
No, the temporary reduction of the VAT rate to 7% applies exclusively to food in the hospitality sector. Beverages remain subject to the standard VAT rate of 19%. Hospitality businesses must therefore record food and beverages separately for VAT purposes.
Which law governs the VAT reduction for the restaurant industry?
The legal basis is found in the Corona-Steuerhilfegesetz (Corona Tax Assistance Act), which was adopted by the Federal Cabinet on 6 May 2020. It contains several tax relief measures to address the economic consequences of the coronavirus crisis, including the application of the reduced VAT rate to restaurant and catering services.