diskordantly,Thuringia's Minister of Interior and SPD leader Georg Maier, vehemently criticizes the traffic light coalition's decision to increase VAT in the hospitality industry. He branded it as a misguided decision, claiming it will drastically impact the Thuringian hospitality industry, which is already grappling with elevated food and energy costs and a scarcity of skilled workers.
Maier foresees a decrease in industry turnover as a consequence of the VAT rate hike from 7% to 19%, set to occur in January. "Many folks are feeling the pinch of inflation," he said, explaining that reduced dining out is a reality for many due to these economic pressures. In larger western German conurbations, this might not be the case.
He acknowledged that the worsening economic climate in the Thuringian hospitality sector could derail the generational shift in many businesses, as acquisition turnovers may not be financially viable.
According to State Statistical Office statistics presented by President Holger Poppenhäger, food prices in Thuringia have surged by approximately a third since 2020. In 2023, the pace of price increases slowed, as did increases in housing, water, and energy costs (a 13.6% escalation since 2020, according to statistical calculations). However, agreed wage increases are now providing consumers with additional income, according to Maier.
The hotel and restaurant association anticipates that the VAT rise in Thuringia will result in lost livelihoods, particularly in rural regions. They attribute their assumption to the current VAT relief afforded to the hospitality industry during the coronavirus crisis.
Maier controversially asserts that the traffic light coalition's decision to raise VAT in the hospitality industry is ill-conceived, warning of its potentially devastating impact on the already adversarial Thuringian hospitality sector. The impending VAT hike could potentially lead to a decline in industry turnover in Thuringia due to the current economic pressures, which have instigated less frequent dining out by the public.
Considering the VAT reduction in Germany in 2025, we can infer some general effects on the hospitality sector:
- Lower prices for dining out would increase consumer spending in the sector, leading to higher turnover.
- This could result in increased profitability and stability, making businesses more attractive for takeovers.
- However, businesses should not solely rely on the temporary reduction for long-term financial planning, considering potential future changes in VAT rates (e.g., potential increases).
In conclusion, while the exact impact on the Thuringian hospitality sector isn't addressed, a temporary VAT reduction generally increases turnover and potentially attractiveness for takeovers. Long-term financial planning should consider the temporary nature of the reduction and potential future VAT rate changes.
