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German VAT Rate Reduction Gives Hope to Irish Sector

The German Government has confirmed that the VAT rate on restaurant meals will be reduced from 19% to 7% for a 12 month period, beginning on 1st July.

The announcement was made by the country’s Finance Ministry on Twitter on Thursday 23rd April.

In a statement, the ministry said the reduction was part of a package of measures that included tax relief for small and medium sized businesses, and an increase in short-term work alloances used to compensate workers who have been laid off or given reduced hours.

The reduced rate puts restaurant meals in line with the vat on takeaway services, which stands at 7% in Germany. The reduction does not apply to bars.

Germany’s hospitality association DEHOGA welcomed the announcement. The association president, Guido Zöllick, called the move “An important and encouraging signal”.

The move gives hope to the Irish hospitality sector, which is increasingly campaigning for a reduction in the 13.5% VAT rate that restaurants currently pay in order for operators to survive the current shutdown and successfully reopen.

Adrian Cummins, CEO of the Restaurants Association of Ireland, said: “If the German Government can reduce VAT in restaurants to 7% from 19% in advance of reopening, Ireland must follow and bring VAT to 0% from 13.5% when we reopen.

“The public health experts rightly will decide if and when parts of our economy will re-open, and restaurants will need to rapidly adapt to the new norm of social distancing. Due to the resulting decreased capacity for most restaurants, the Government will need to introduce 0% VAT for restaurants, rates write off & reboot grants. The Government at this time needs to support Irish businesses and stand in solidarity with us.”

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