19% value added tax – how can this challenge be tackled?

In the ‘Good Question’ section, experts express their opinion on topics that stir up the hospitality industry. Short and sweet. The question on today’s menu: 19% value added tax – how can this challenge be tackled?

The Experts

  • Ulrich Schmalz, managing director of the inn and hotel ‘Zum Engel’ in Ravensburg.
  • Björn Swanson, German-American Michelin-starred chef, restaurant Faelt in Berlin.
  • Guido Zöllick, President of the hotel and restaurant association Dehoga
Good Questions! One Question, three answers

What´s it all about?

In the ‘Good Question’ section, experts express their opinion on topics that stir up the hospitality industry. Short and sweet.

  • Ulrich Schmalz is the managing director of the ‘Zum Engel’ inn and hotel in Ravensburg.
    Ulrich Schmalz is the managing director of the inn and hotel ‘Zum Engel’ in Ravensburg. Schmalz has been managing the traditional establishment, built in the 15th century in the original town centre, since 1990. He sees no choice but to pass on at least part of the financial burden to his guests. This is due in large part to the value added tax increase at the beginning of the year.
‘Our schnitzel now costs 19 euros instead of 17 euros. But our price increase of 12% is not only due to the value added tax hike. The value added tax is just one of many factors. Personnel expenses and prices of goods also present us with immense challenges. And we simply can't cope with that anymore. Anyone who shops at a supermarket knows how high the prices have become. Fortunately, our guests understand and are willing to pay the higher prices. To be honest, we didn't expect this. We thought they would need time to get used to the new prices. We do make it clear though that we don’t just want to maximise profits and see what we can get away with. We need to increase prices to survive.’

‘Like everyone else, I am concerned about the value added tax increase in 2024, but it is a reality we must accept. We have to deal with the consequences and learn from them. As restaurateurs, we should leverage our social media presence and networks to spark a positive and optimistic turnaround. We need to shed our pessimism and attract attention with fresh ideas and concepts. That’s the only thing that will get us anywhere. All the whining and pleading I still hear from some won’t. We’re an industry full of creative minds – if we can’t do it, who can? Of course, this doesn’t mean we shouldn't address the VAT issues facing the hospitality industry. For example, we decided to reduce the amount of meat on our menu and offer additional fish and meat options that can be ordered separately. We’re talking about a base price of 99 euros instead of 134. This gives guests more options and greater flexibility.

  • Guido Zöllick, President of the German Hotel and Restaurant Association Dehoga.

    Guido Zöllick, the President of the hotel and restaurant association Dehoga, is calling for measures to take pressure off businesses and strengthen them. Specifically, this meansless bureaucracy, more flexibility for entrepreneurs and reverting back to a VAT rate of 7% in the hospitality industry.

    Picture: Zöllick, Guido_President DEHOGA Federal Association 2022©Hotel NEPTUN

‘In mid-April, we published the results of a survey on the economic situation in the industry, which included responses from 3,175 hospitality entrepreneurs. It’s clear that the hotel and hospitality industry is facing major problems. Our survey shows that restaurateurs and hoteliers experienced an average of 5.7% decrease in turnover in March compared with the previous year. Even the crucial Easter business was slow. Businesses have to cope not only with declining sales but also with high food costs, personnel expenses and energy costs, as well as, in some cases, increased rent. Businesses are being hit particularly hard by the value added tax increase on food and ever more bureaucracy. Now, more than ever, it is important to secure the future of the industry. We urge policymakers to take pressure off the industry and thus provide it with new opportunities.’

Did you know?

23 European Union (EU) states do not distinguish for tax purposes between wholesale food, food delivery, takeaway and in-restaurant dining. Germany does make a distinction and has a higher tax rate for dining out. 👉 MPULSE Article: How much should value added tax be for the hospitality industry?
Good Questions! One Question, three answers

VAT in hospitality: the consequences of 19%

In late 2023, the federal government decided: from 2024, VAT will return to 19%. How will that impact restaurateurs?

Civey survey on behalf of METRO

A recent survey illustrates the consequences of a VAT increase for the catering industry from the population's perspective. At the same time, the survey underlines the great importance of gastronomy for attractive city centres and social interaction. 👉 To the survey (German only)

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