No reduced VAT rate for gastronomy from 2024 onwards

9. Oktober 2023

The year 2024 will bring an important tax change for the catering industry in Germany. The Finance Committee has decided that the reduced VAT rate of seven percent for the catering industry will not be continued beyond 2023.

The proposal to maintain this tax rate was introduced by the CDU/CSU parliamentary group, but did not receive the necessary approval in committee.

Background to the decision

The rejection of the reduced VAT rate was justified in particular by the impact on the federal budget and the current tight budget situation. The SPD pointed out that this reduced rate is listed as the third largest subsidy in the federal government's subsidy report. Accordingly, the final decision on a possible continuation should only be made during the budget discussions.

Despite the rejection, the CDU/CSU parliamentary group showed optimism, seeing in the statements a "certain openness" to its concerns. The Union also recalled the support expressed by both Chancellor Olaf Scholz (SPD) and Finance Minister Christian Lindner (FDP) during the Corona pandemic. The temporary tax cut was introduced during the pandemic as a measure to support the restaurant industry. In addition, the CDU/CSU criticized the standstill in current tax policy.

Other positions in the Finance Committee

Bündnis90/Die Grünen argued against the CDU/CSU motion on the grounds that continuing the reduced tax rate would burden the federal budget with an additional 3.3 billion euros. Another point of criticism was the apparent contradiction between the CDU/CSU's high spending wishes and its support for the debt brake. The Greens also pointed out that the economic situation in the hospitality industry had improved, according to a survey by the industry association Degoha.

The FDP called for a general reform of sales tax law to achieve greater uniformity. The AfD also criticized the current inconsistent sales tax system, highlighting the example of different taxation of meals depending on whether they are served in porcelain dishes or disposable materials.

The Left expressed concerns about a possible price increase by businesses if the VAT rate is raised again. The group stressed that direct aid to the catering industry would have made more sense than tax relief from the outset.