Checkout at one register and a sale is exempt; use another and it’s taxable

If a business provides different types of goods and services, the question is if and how these can be split. In some grocery stores in the US, it is possible to (also) order and consume food ‘on the spot’.

Avalara posted an article in which this question also is raised:

“Since meals sold by a restaurant (or restaurant area of a grocery store) are generally subject to Massachusetts sales tax,  should grocery items be taxed when rogue shoppers/diners bring them through the restaurant-area cash registers?”

Or, more specifically: is it necessary to pay for your groceries first (often exempt from sales tax), before you enter the restaurant area?

The article provides insight on this. But it reminded us of an earlier article we posted on consumption tax in Japan. See our post HERE. The Japanese government introduced a reduced rate for take-out food in order to change customers’ lifestyles and the growing demand for take-outs.

The problem, however, was that customers did in fact not take-out their order, but they consumed it at the place where they bought it. Which, technically, made the supply subject to the standard rate.

In this respect the ECJ case C-703/19 (Katowicach) may also be interesting to follow. This case deals with the question if restaurant services and take away dishes should be treated differently. The questions in this case can be found HERE.

The article of Avalara can be found here: Avalara

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