HOTREC urges EU and Member States to support hospitality sector recovery with reduced VAT rates

 

HOTREC, FoodDrinkEurope and FoodServiceEurope have asked for support from the EU for temporarily reduced VAT rates in the hospitality sector in order to mitigate the impact of the COVID-19 crisis. A position paper co-signed by all three organisations highlights why reduced VAT rates are beneficial for hospitality and contract catering and an essential and highly effective measure of support to support the recovery of the sector in the aftermath of lockdown measures.

The position paper specifically urges the EU to:

• support for reduced VAT rates and give a strong signal to the EU Member States’ national governments,
• give temporary flexibility with regard to the existing EU VAT framework so that, if possible, EU Member States could set a reduced VAT rate of 5% for hospitality services.

Many sectors, including hospitality and contract catering, face exceptional economic difficulties and lack of liquidity amidst the COVID-19 crisis. Amongst these measures, several EU Member States (Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Greece) and other European countries (UK, Norway) have introduced temporarily reduced VAT rates for hospitality services. In certain cases, existing reduced rates have been further lowered for the hospitality sector.

The establishment of reduced VAT rates is first and foremost an issue for national governments, but the EU VAT Directive of 2006 sets a lower threshold of 5% for reduced VAT rates and allows EU Member State to have one or two reduced VAT rates.