German Brewers' Association calls on government to extend reduced VAT rate for food in restaurants

Germany | The German Brewers Association has appealed to the government and parliament to maintain the reduced VAT rate of 7 percent (previously 19 percent) for food in restaurants beyond 2023.

The effects of the covid pandemic hit restaurants and pubs hard, when turnover declined massively for months on end, Christian Weber, President of the German Brewers Association, said. “We are grateful to the government for its support, without which many restaurants, pubs, beer gardens and cafés would not have survived. Now it is important to maintain that support in order to prevent another wave of bankruptcies in the hospitality industry,” Mr Weber added.

Some 36,000 hospitality businesses went under in 2020 and 2021 alone. Now, the remaining on-premise venues, as well as breweries, are struggling under massive cost increases. Food prices went up by 13.7 percent in June 2023 over June 2022. Energy prices and wages have also risen sharply, with businesses finding it increasingly difficult to fill job vacancies.

Kick the can down the road

The German Brewers Association therefore called on the government and parliament to maintain the reduced VAT rate. A return to the previous 19 percent rate on 1 January 2024 would have fatal consequences for the hospitality industry and not least for the brewing industry, which consists of some 1,500 predominantly small and medium-sized breweries.

The Association pointed out that the reduced VAT rate currently applies in 23 EU member states, without any distinction being made between food in restaurants, supermarkets, and delivery services.

The government has already signalled that it will review the issue in November, or December – which many in the hospitality find far too late. For example, who will make the changes to the software system etc. over the Christmas holidays should the 19 percent rate apply as of 1 January? A banal but pressing concern.