This article was last updated on 13th July at 12:00 BST
EU Member States are introducing a variety of VAT measures. These measures assist businesses in navigating their way through tough trading conditions brought about by the COVID-19 pandemic.
However, more recently we are seeing more tax authorities introducing temporary reduced VAT rates for goods and services within the hospitality and tourism sectors.
Please find below the EU countries that implemented temporary reduced VAT rates into law as a result of COVID-19:
A reduction in the VAT rate for the sale of non-alcoholic beverages in taverns from 19% to 10% and the VAT rate shall also be reduced to 5% for the period 1st July till 31st December for the following sales (including internet sales):
- Food and beverages sold in restaurants
- Books, newspapers, picture albums
- Works of art and art photographs
- Services of theatres, cinemas, museums, opera houses and other vocal performances
- Sales by charitable organisations
- Passenger transport
- Waste disposal
A reduction in the VAT rate from 12% to 6% applies to restaurant and catering services. This includes non-alcoholic drinks but excludes the provision of beers with alcohol exceeding 0.5% vol. and other beverages with alcohol exceeding 1.2% vol. The new rate applies from 8 June 2020 to 31 December 2020.
A reduction of the VAT rate for restaurant and catering services (excluding alcoholic beverages) from 20% to 9%. The new rate will apply from 1 July 2020 to 31 December 2021.
The Government announced a reduction in the reduced VAT rate on accommodation and admission to cultural events from 15% to 10%.
The VAT rate applicable to the tourism sector, namely hotel accommodation, restaurant services and passenger transport services decreases from 9% to 5%. The new rate will apply from 1 July 2020 and 10 January 2021.
A reduction of the VAT rate from 19% to 7% (potentially 5% from 1 July 2020 – 31 December 2020) for restaurant and catering services (with the exception for drinks). The new rate applies from 1 July 2020 to 30 June 2021.
A reduction of the VAT rate for any type of transport, coffee and non-alcoholic beverages from 24% to 13%. The new rate applies from 1 June 2020 to 31 October 2020.
The UK has reduced the VAT rate from 20% to 5% on the following items as from 15 July 2020 to 12 January 2021:
- Supply food and non-alcoholic beverages for consumption in a restaurant, café or pub, this includes the supply of hot takeaway food and hot take away non-alcoholic drinks.
- Hotel and holiday accommodation including caravan and campsite pitches and facilities.
- Admissions to attractions where supplies are currently standard-rated i.e. theme parks.
Businesses supplying the following goods and services in those EU Member States must apply the correct VAT rates. Businesses recovering VAT on expenses incurred will also need to take the above into account – whilst applying and budgeting for the correct rates.
If you have any questions on the EU reduced VAT rates as a result of COVID-19, please contact one of our VAT experts.