Draft Tax Amendment Act 2025: Reduced VAT for Restaurants from January 2026

• A reduced VAT rate for restaurant and catering services, excluding beverages, was temporarily implemented from July 2020 to December 2023 as a crisis measure.
• The VAT rate was reduced to 5 percent in the second half of 2020 to support the restaurant industry during the pandemic.
• The measure was extended multiple times and supported by letters from the German Federal Ministry of Finance.
• A new reduced VAT rate for restaurant and catering services, excluding beverages, will begin on January 1, 2026, as part of the 2025 Tax Amendment Act.
• The goal is to support the restaurant industry economically and avoid competition distortions, especially near borders with neighboring countries.
• The reduced VAT rate simplifies the distinction between eat-in and take-away services from a VAT perspective.
• The 7 percent VAT rate will eliminate difficulties in distinguishing between different types of food services.
• A letter from the German Federal Ministry of Finance is suggested to accompany the legislative measure for clarity and to address combination offers of food and beverages.

Source: kmlz.de

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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