Overview

• Germany's CDU, CSU, and SPD coalition has finalized a permanent reduction of restaurant VAT from 19% to 7%, effective January 1, 2026.
• Industry representatives caution that recent increases in personnel and supply costs may absorb the tax savings, keeping consumer prices unchanged.
• A survey by Dehoga reveals that nearly 40% of restaurant operators fear financial losses in 2025 due to rising operational expenses.
• Approximately 70% of restaurant revenues are allocated to personnel and goods costs, leaving limited flexibility for price adjustments.
• The VAT cut aims to support the hospitality sector, but many businesses report feeling severe financial pressure as costs continue to escalate.