VAT regulations for restaurateurs and farmers adjusted

The reduced VAT rate in the catering sector will be extended by a further year and the average rate for flat-rate farmers will be adjusted in 2023.

The Eighth Act Amending Excise Tax Laws essentially transposes EU regulations on excisable goods into German law. However, the Act also contains two important changes to VAT for certain sectors.

• Gastronomy: The law implements the long-announced extension of the reduced VAT rate for the catering industry. This means that restaurant and catering services, with the exception of the supply of beverages, are subject to the reduced VAT rate of 7 % for another year, i.e. until December 31, 2023.

  

• Farmers: The law also provides for the annual adjustment of the average rate for flat-rate farmers. This will be reduced from the current 9.5 % to 9.0 % for 2023. For a farmer who is planning large investments with a correspondingly high input tax deduction potential, it may therefore be worthwhile not to apply average rate taxation.