EAn update of the reduced VAT rate for meals in restaurants does not yet have a majority in the Bundestag. On Thursday, the MPs first discussed a motion from the left-wing faction entitled “Stop tax increases on gas, district heating and in the catering industry”.
Energy and food have recently been the strongest price drivers, according to the reasons for the application. The purchasing power of low and middle incomes in particular would have suffered massively. In order to cushion the loss of purchasing power, the sales tax rates for gas and district heating as well as for catering in the catering industry were temporarily reduced to 7 percent.
Worry about inflation and bankruptcies
The expiry of these measures would lead to a tax increase of around 10 billion euros per year, almost 7 billion euros for gas and district heating, and 3 billion euros for the catering industry. The higher sales tax will be passed on to customers and will fuel inflation, the group warned in its application. Particularly in the catering industry, the collapse in demand would pose a risk of insolvency for tens of thousands of businesses. The Bundestag referred the bill to the committees for further discussion.
In the late afternoon of the same day, the final discussion of a draft bill from the Union parliamentary group on this topic was on the agenda. The only substantive article provides for the “permanent suspension” of the paragraph in the VAT Act that regulates the reduced VAT rate for restaurant and catering services.
The justification is that this has been in effect since July 2020, with the exception of the distribution of drinks. This was intended to make a contribution to combating the consequences of Corona and strengthening domestic demand, initially for a limited period until mid-2021. Then the legislature initially extended this until the end of 2022, which later became the end of 2023.
“The catering industry needs planning security for the situation from 2024 as early as possible, not least because of family and company celebrations, which often have to be booked many months in advance and calculated accordingly,” argue the CDU and CSU. Short-term extensions such as those recently made this planning considerably more difficult. “When extending credit, credit institutions also expect a statement about sales and profit expectations for the next few years.”
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