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What VAT rate should be used in gastronomy?

Author

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  • Matthias Balz

Abstract

The Ministers of Finance of the 27 EU member states decided to allow the member states to apply reduced tax rates, also for restaurant services, at their meeting on 10 March 2009. This is now an option for all EU member states and not only, as previously, for those that joined the EU in recent years. Currently in Germany 20 percent of the sales in the restaurant industry are taxed at the reduced tax rate of 7 percent, especially sales from street vendors and self-service eateries: for take-out sales as for food products the reduced tax rate of 7 percent applies. The normal VAT rate in Germany of 19 percent applies to gastronomy services in closed rooms. In terms of competition it is not understandable why in the various fields of food sales different tax rates apply. It is welcome that the government has stated that a change of the status quo would be difficult in the present legislative period but that the policy will be reviewed at the beginning of 2010.

Suggested Citation

  • Matthias Balz, 2009. "What VAT rate should be used in gastronomy?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 62(06), pages 20-21, March.
    • Handle: RePEc:ces:ifosdt:v:62:y:2009:i:06:p:20-21
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    File URL: https://www.ifo.de/DocDL/ifosd_2009_6_3.pdf
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    Cited by:

    1. Matthias Balz, 2016. "Focus on Industry Branches: the Hospitality Industry," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 69(16), pages 58-64, August.

    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L89 - Industrial Organization - - Industry Studies: Services - - - Other

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