Germany's Tax Amendment Act 2025 will permanently reduce VAT on restaurant and catering food to 7% from 1 January 2026, while the standard 19% VAT rate will continue to apply to most beverages.
The German government has approved the Tax Amendment Act 2025 (Steueränderungsgesetz 2025), introducing a permanent 7% VAT rate for restaurant and catering food, excluding beverages, from 1 January 2026.
The measure amends sec. 12 para. 2 no. 15 of the German VAT Act, reducing the VAT rate on food consumed on restaurant premises from 19% to 7% and establishing a single VAT rate for dine-in, takeaway and delivery food.
The reform is intended to support restaurants, cafés, bakeries, butchers and catering businesses while simplifying VAT compliance. By applying the same 7% VAT rate to most food sales regardless of how customers receive them, the government aims to remove the long-standing distinction between dine-in and takeaway services and improve competitiveness, particularly for businesses operating near Germany’s borders.
The reduced rate does not apply to most beverages, which will continue to be taxed at 19%. An exception applies to milk drinks with more than 75% milk, which will qualify for the 7% VAT rate from 2026.
Businesses will also need to update their point-of-sale systems to reflect the new rules, removing the need to switch between separate VAT settings for eat-in and takeaway food.
The Federal Ministry of Finance (BMF) is expected to issue a BMF-Schreiben ahead of the implementation date to clarify the treatment of combination offers, such as meal deals including beverages, and restaurant vouchers.
The guidance is intended to help businesses prepare for the new VAT regime before it takes effect on 1 January 2026.
