The Federal Council approved the Tax Amendment Act on 19.12.2025, meaning that, among other things, the reduction in VAT for food in restaurants will apply from 1.1.2026. The following explanations provide an overview of the most important changes to VAT.

Changes to value added tax

1. reduction in VAT for food in the catering trade (Section 12 (2) No. 15 UStG)
The VAT rate for food in the catering sector (restaurant and catering services, with the exception of the supply of drinks) will be permanently reduced to 7% (reduced VAT rate) from January 1, 2026. This already applied as a temporary crisis measure from 1.7.2020 to 31.12.2023. Since 1.1.2024, the standard tax rate has applied to these services againThe aim of the measure is to provide economic support for the catering industry. In addition, distortions of competition are to be avoided, as food delivered or taken away is already subject to the reduced VAT rate.

2. input tax refund procedure (§ 18g sentence 5 UStG)
With regard to Section 122a AO in the version applicable from 1.1.2026, the electronic notification of decisions on the non-forwarding of an application for input tax refund by the BZSt will be designed as a standard case by abolishing the current requirement for the consent of the domestic entrepreneur.

3. use of central customs clearance (§ 21b UStG)
A new Section 21b UStG is intended to implement the decoupling of the place of presentation and the place of submission of the customs declaration in VAT law across Member States as provided for in the Union Customs Code (UCC), with the result that traders not established in Germany who are authorized to participate in centralized customs clearance across Member States in accordance with Art. 179 para. 1 UCC and who carry out taxable transactions in Germany in accordance with Section 1 para. 1 no. 4 UStG are liable for import VAT on these transactions in Germany and are obliged to declare them in accordance with domestic requirements.

4. increase in the average rate limit (Section 23a (2) UStG)
An average rate of 7 percent applies to the calculation of deductible input tax amounts for corporations, associations of persons and asset pools within the meaning of Section 5 (1) no. 9 KStG. Beneficiaries can only claim this average rate up to a certain turnover. In order to continue to achieve uniform amount limits for tax relief for tax-privileged corporations, the turnover limit will also be raised from €45,000 to €50,000 in Section 23a para. 2 UStG from 1.1.2026 in parallel with the increase in the taxation limit in accordance with Section 64 para. 3 and Section 67a AO.