VAT reduction in the catering industry is likely to be permanent

The Federal Minister of Finance assumes a permanent reduction of the sales tax rate in the catering industry and thus follows considerations of other parties.

Under current law, the application of the reduced sales tax rate in the food service industry for meals is limited until the end of 2022. While some parties have consistently advocated such a reduction for years, there was never a majority in favor of such a provision before the Corona crisis. While this provision accommodates the restaurant industry and avoids myriad difficult demarcation issues that have arisen repeatedly over the years, it also comes with a loss of tax revenue.

In an interview on the occasion of the federal election, the German Finance Minister Olaf Scholz has now also commented on the amendment, stating that he agreed to the introduction and extension of the reduction in the certain knowledge that "we will never abolish it again". Even if this is not yet a guarantee, there is much to suggest that after the election all conceivable government coalitions will make the amendment permanent.