VAT on food service to drop

VAT on food service to drop

The government is edging closer to cutting the value-added tax on food service from 13% to 11%, but if this measure does come into effect it will only be temporary, lasting for the duration of the health crisis.

That means the implementation of the measure will coincide with the resumption of food service activity on June 1 – or on May 25 if the government speeds up the easing of restrictions – and last until September, or more likely till the end of the year.

The issue of VAT as well as all the support measures for the sector were on Monday the focus of a video conference between the top officials of the Finance Ministry and representatives of the Hellenic Association of Organized Food Service Enterprises (EPOES). It became clear in the process that the reduced VAT will only apply for as long as the 2021 budget allows, and will depend on whether the European Commission sets any fiscal restraints next year.

The ministry is even closer to reducing VAT on coffee consumption from 24% to 13%, which according to food service chains has been this government’s pledge since last summer. The sector’s representatives stressed they would pass on the bulk of the VAT reduction to consumers.

Any measures the government takes on financially to support the sector will also be short-term, led by the subsidizing of the salary costs of employees.

In the case of food service enterprises that do not have any outdoor areas and will not benefit from government plans to expand the space restaurants and cafes use on sidewalks, pedestrian streets and squares, they may get the favorable treatment equal to that received by the tourism enterprises hurt most by the pandemic. A similar approach is also being considered for the food catering companies that have remained shut since late February due to the lack of any events.

The food service sector also views the reduction of the income tax deposit as vital. In fact it sought for it to be scrapped altogether for the period of the health crisis, but the government would not agree to that. Therefore the sector is willing to settle for a reduction of at least 50%.

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