Higher VAT rate in the hospitality industry from 2024

The application of the reduced VAT rate for food in restaurants, which is limited until December 31, 2023, will not be extended beyond the turn of the year.

It is now clear that the reduced VAT rate of 7 % for food in restaurants will not be extended beyond the turn of the year. The regulation was introduced during the coronavirus pandemic and was originally intended to run from July 1, 2020 to June 30, 2021, but was then extended twice, most recently until December 31, 2023. Even though there were initially unanimous assurances that a further extension of the regulation was actually only a formality, it became apparent in late summer that a continuation of the regulation was on shaky ground due to the tight budget situation for 2024.

After the Bundestag finally decided against an extension, several federal states applied for an extension via the Bundesrat in November. However, this request did not find a majority in the Bundesrat, and so from January 1, 2024, a uniform VAT rate of 19 % will once again apply to both food and beverages in the catering industry. In addition to the drastic rise in food prices since the beginning of 2022, the industry will also have to take the higher tax rate into account from 2024, which will lead to price increases and profit losses.