Temporary VAT rate reductions for hospitality - HOTREC, FoodDrinkEurope and FoodService Europe Position Paper

HOTREC, FoodDrinkEurope and FoodServiceEurope ask for support from the EU for temporary reduced VAT rates in the hospitality sector in order to mitigate the impact of the COVID-19 crisis. Our position paper highlights why reduced VAT rates are beneficial for hospitality and contract catering and an essential and highly effective measure of support in these times.  

Position Paper: 

Background

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.

Our position paper therefore:

• urges the EU to support for reduced VAT rates and give a strong signal to the EU Member States' national governments,
• 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.