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Germany Cuts Restaurant VAT to 7%, With Limited Pass-Through to Menu Prices

Higher labor costs plus pricier inputs are soaking up the tax savings for many restaurateurs.

Overview

  • The lower rate took effect on January 1, reversing the 19% levy on dine-in meals and aligning restaurant tax treatment with takeaway.
  • DEHOGA welcomed the change as ending unequal treatment and said the 7% rate helps secure businesses, stabilize or lower prices, and enable investment.
  • Surveys and interviews show many operators are keeping menus unchanged to offset the new €13.90 minimum wage plus rising energy and food bills.
  • A minority are passing on some relief, with selected price cuts or targeted offers such as free children's meals or rolling back 2023 increases.
  • Reporting from local outlets and national anecdotes indicates diners often still face high or unchanged prices, though some owners suggest reductions could follow if costs ease.