French to cut VAT on eateries
Wednesday May 27, 2009
Ministers in France have been given approval by the European Union (EU) to cut the sales VAT it charges on eating out in the country.
In a move that is hoped will boost tourism, the sales tax on French restaurants and cafes will be reduced from 19.6 per cent to 5.5 per cent from the start of July.
Reuters reports that the move is likely to lead to a major increase in lost revenues for the country’s government, but the boost to restaurant business is expected to offset such issues.
Economy minister Christine Lagarde said: "The reduction in VAT is going to let France…conserve and improve its culinary reputation."
Earlier this month, the EU revealed that its member states can offer reduced VAT rates on a number of labour-intensive services, including eateries, clothing and shoe-repair firms.