Since the adjustment of VAT on food in restaurants in January, around half of restaurant establishments in Germany have registered fewer customers, according to the industry association Dehoga. Around a third of the restaurant establishments surveyed stated that the average bonus per guest had been lower since the VAT adjustment, as a Dehoga survey shows.

During the coronavirus pandemic, the VAT rate for food in restaurants or cafes was temporarily reduced from 19 percent to 7 percent to ease the burden on the sector. This exemption was extended several times due to the energy crisis, the last time until the end of 2023.

The highest rate of 19 percent has been back in effect since the beginning of the year. In the case of beverages, this tax rate has remained the same over the years. According to the association, 3,175 companies participated in the Dehoga Federal Association survey from April 3 to 12.

A third of businesses have reduced their opening hours

According to the survey, approximately four out of five restaurant establishments surveyed have increased prices in recent weeks. “After four years of losses, the enormous increase in costs left companies no choice but to adjust prices,” says Dehoga president Guido Zöllick.

According to the survey, almost two thirds of companies are giving up investments or reducing their expenses in this area due to the VAT adjustment. Almost a third of the companies surveyed shortened their opening hours.

Zöllick calls for a uniform taxation of seven percent for all foods

At the end of 2023, Dehoga repeatedly spoke out against returning to the general VAT rate. Zöllick calls for food to be taxed at a uniform rate of seven percent. The association considers it “absurd” that a different tax rate is applied to food in restaurants than to takeout.

According to Dehoga, 45.1 percent of the companies surveyed assume that in the next three months the business will develop worse than today (better: 15.5 percent, unchanged: 39.4 percent). When asked what the biggest challenges are, three-quarters of companies cited rising staff costs. Approximately two-thirds of respondents cited VAT adjustment, bureaucracy and rising energy costs as the biggest challenges.

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