Industry association expects rising prices in the food service sector

VAT on food in restaurants was reduced to 7% for some time. From January 1, the previous rate of 19 percent will apply again. The industry association expects that, in the end, people other than restaurateurs will have to dig deeper into their pockets.

, and Vladimir Milov

2023 December 28 . 6:33 AM

2 min read

A set table in a restaurant is ready for guests. Photo.aussiedlerbote.de

Hospitality industry - Industry association expects rising prices in the food service sector

According to the gastronomy industry association Dehoga, restaurant visitors can expect rising prices for food in the new year. "The VAT increase will exacerbate the ongoing cost dynamics", said the President of the German Hotel and Restaurant Association (Dehoga) North Rhine-Westphalia, Patrick Rothkopf, to the German Press Agency. At the turn of the year, VAT on food will rise from 7 percent back to the usual 19 percent.

The reduced tax rate during the pandemic and the energy crisis has helped to curb cost increases in the catering industry so far. "From next year, this compensation will no longer be available," said the head of the association. According to him, many restaurateurs will have to pass on the rising tax to their guests. According to surveys of its members, Dehoga NRW assumes that prices for food in the catering industry will rise by an average of 14.3 percent. In purely mathematical terms, the tax increase only amounts to 11.2 percent.

However, businesses will also have to shoulder higher costs for food and salaries, for example. In the fall, Dehoga NRW had initially assumed an even higher price increase of 15.5 percent on average. The association complains that the return to the old rate would result in tax differences that are unfair. "Tax fairness means taxing food at a uniform rate of 7 percent. No one can explain to me why only food in restaurants, canteens, daycare centers and school caterers is taxed at 19 percent, while packaged takeaway, to-go or drive-in food, food delivery and ready-made salad from the supermarket continue to be taxed at 7 percent," said Rothkopf.

In order to ease the burden on the food service industry during the coronavirus pandemic, the tax rate for food in restaurants and cafés was temporarily reduced from 19% to 7% - while the rate for drinks remained at 19%. The exemption was then extended several times due to the energy crisis, most recently until the end of 2023. The German government put the annual costs at 3.4 billion euros. Takeaway, supermarket and delivery food is generally taxed at 7 percent.

In the latest nationwide economic survey conducted by Dehoga, in which more than 1,000 companies from NRW took part, 58.8% of the businesses surveyed in the state stated that the future VAT rate on food would hit them hard economically. According to the survey, 12.9 percent of businesses assumed that the changeover would drive them to the brink of ruin. According to the survey, one in 20 businesses expected to close due to a lack of prospects.

Dehoga NRW describes rising employment figures as a ray of hope. With more than 400,000 employees, the hospitality industry in NRW has at least returned to the level of 2019. This also applies to the new training contracts. But there is still a shortage of skilled workers. During the coronavirus pandemic, a lot of expertise was lost and fewer people were trained. "We have to make up for this step by step in a challenging environment. The shortage of labor and skilled workers will therefore continue to occupy us for a long time to come," said Rothkopf.