Giffey Pushes for Persisting Lower VAT for Eatsphere
Economic Affairs Senator of Berlin, Franziska Giffey (SPD), has vocalized her support for keeping a 7% value-added tax (VAT) rate for the food service sector, including schools, hospitals, and daycare centers. She believes that returning VAT on restaurant meals to 19% is premature in the current situation. Giffey advocates that this issue should be a priority as the government seeks ways to bolster economic power and growth opportunities.
On Wednesday, Dehoga, the state gastronomy association, reiterated their demand for an extended lower VAT rate for food in the catering industry. Last week, the government agreed to increase VAT for restaurant meals back to 19%, with the VAT reduction introduced during the early stages of the coronavirus pandemic, which brought relief to the industry. The rate was initially 5% due to a general VAT reduction, but it went up to 7% since January 2021. The extended VAT relief for the catering industry is a result of the ongoing energy crisis and high inflation, particularly in food prices.
In response to Giffey's proposal, the Senate might consider supporting this initiative, as it directly affects the Hospitality industry. Senate Finance Committee members may also explore the possible repercussions of this decision on various sectors, including Hospitality, during their forthcoming deliberations in the Senate.
Introducing Insights from Enrichment Data:
Germany's current VAT rates include a standard rate of 19% and a reduced rate of 7%, applicable to food and beverages, among other items. The temporary VAT rate reduction for restaurant and catering services started in July 2020 and was extended until December 31, 2023. These reductions aim to assist businesses affected by the COVID-19 pandemic.
Lithuania's parliament is currently considering the potential introduction of a reduced VAT rate for food products and public catering establishments, although this is specific to Lithuania and not related to Frankfurt or Germany. As the details of Giffey's proposal remain unclear, it's essential to consult recent announcements or statements from German economic or tax authorities for the most up-to-date information.
