7 percent VAT: What will change for restaurateurs in 2026

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7 percent VAT - more than just a number for restaurateurs

The food service industry is hoping for major tax relief: in the spring of 2025, the CDU, CSU and SPD agreed in the coalition agreement that VAT on food would be reduced to 7% from January 2026. The decision has not yet been enshrined in law, but the signs for a permanent reduction are good.

Since the coronavirus pandemic, it has been an ongoing issue in the industry: VAT on food. Originally reduced to 7% to support the industry, the coalition government raised it again to 19% in 2024. The reasons given: The tight budget situation and the assessment that the economic situation of the catering industry had stabilized sufficiently to be able to dispense with the pandemic-related special regulation. So much for the theory - in practice, a return to the higher VAT rate looked and still looks very different for many restaurateurs: It led to many closures in the sector.

The 19 percent VAT rate is still a challenge for many restaurateurs today. This makes the planned permanent reduction all the more important. What looks like a tax correction on paper means economic survival for businesses. Particularly in a European comparison, Germany stands out in terms of VAT regulations for the catering industry: While the majority of 23 EU member states, including Spain, Italy and Greece, for example, levy reduced VAT for the catering industry, Germany still taxes food "to go" (7 percent) and consumption in restaurants (19 percent) differently.

Current legal basis for VAT in the hospitality industry

Anyone visiting a restaurant in Germany pays 19% VAT on food and drinks. However, guests who take their order with them and do not consume it on site only pay 7% VAT. The reason for the differentiation is that the service, the room and the furnishings are different for on-site services, which are taxed accordingly. The CDU, CSU and SPD now want to end this differentiation. The coalition agreement states: "VAT on food in the catering sector will be permanently reduced to seven percent as of 01/01/2026." Despite critical voices - from Alliance 90/The Greens, for example - the CDU/CSU-SPD coalition is sticking to its goal of providing stability for the sector.

What does the VAT reduction mean for restaurateurs?

For many restaurateurs, VAT is a matter of survival. "All costs in the hospitality industry have exploded in the last two years. Staff costs have risen by around 40 percent and food prices have doubled," says restaurateur Kemal Üres in an interview with Rolling Pin, who is campaigning strongly for the 7 percent VAT with the "United for Gastronomy" initiative. For him, one thing is clear: "At the moment, hardly any restaurateurs are making a profit, the industry is in danger. Only by reducing VAT can they fight their way back to life. This is the only way to save the industry."

Other industry giants also welcome the political signal - but urge caution. METRO manager Martin Behle emphasizes: "The road is still very long and uncertain, one can only hope. People are happy about the announcements and are extremely relieved. It gives them courage and prospects - this shows that the sectors are regaining faith in their trade as a result of this announcement."

What does 7 percent VAT mean for guests?

For many restaurateurs, the reduction in VAT is above all a much-anticipated relief that they want to reinvest. Many businesses are initially planning to invest the potential tax savings primarily in staff retention and quality. Take Gunter Braun from Ratskeller Speyer, for example. He told SWR that he wanted to invest the money saved on tax in staff first. And this is entirely in line with the policy, as DEHOGA President Gereon Haumann put it to SWR: "The coalition agreement states that the reason for the lower restaurant tax is 'to relieve the industry' and not 'to relieve the citizens'."

Nevertheless: guests benefit. Not necessarily through the amount on their receipt, but by keeping their favorite cafés, restaurants and pubs. The reduction ensures that hosts do not have to give up and that enjoyment, encounters and variety do not become a luxury. The 7 percent VAT is therefore an investment in the future of the hospitality industry.

Hospitable(er): Less bureaucracy for new restaurant founders

If you want to open a restaurant today, you often need more patience than guests. But this is changing - at least in parts of Germany. Baden-Württemberg is now getting serious about reducing bureaucracy: instead of waiting for a license, a simple notification to the authorities will suffice in future. Sounds unspectacular, but it's a real game changer for restaurant founders in the southwest.

The reform is based on other federal states: In Hesse, Brandenburg and Saxony-Anhalt, mandatory notification has long been standard practice. Eight states have already introduced it and others - such as Rhineland-Palatinate - are following suit. Discussions are still ongoing in NRW, while Bavaria, Berlin and Hamburg are sticking with the classic approval procedure for the time being.

What are the benefits? Less paperwork, faster openings - and perhaps also more variety on the menus. The hotel and restaurant association Dehoga welcomes the reform: it makes it easier to hand over businesses and lowers the barriers to entry for new restaurant concepts.

And what remains? The background check for serving alcohol - of course. But the rest will be much leaner.

7 percent VAT - more than just a number for restaurateurs

What is it all about?

Current legal basis for VAT in the hospitality industry

What does the VAT reduction mean for restaurateurs?

What does 7 percent VAT mean for guests?

Hospitable(er): Less bureaucracy for new restaurant founders