9 December 2025
Permanent VAT reduction for gastronomy and extended transition for public sector
The Bundestag has reaffirmed the reduction of VAT on restaurant and catering services (excluding beverages) to 7% from 1 January 2026, as outlined in the coalition agreement and confirmed in the government’s response to a parliamentary inquiry (Drucksache 21/1161). This measure aims to support the sector and is expected to have a positive economic impact.
Additionally, the government has extended the transition period for the application of §2b UStG (VAT taxation of public sector entities) until 31 December 2026. The extension is justified by ongoing fundamental legal interrogations and practical uncertainties, which currently prevent the full and legally secure implementation of VAT for public bodies.
Key takeaway
Businesses in the hospitality sector should prepare for the permanent 7% VAT rate on food from 2026. Public sector entities must use the extended transition period to clarify open legal questions and adapt their processes for VAT compliance under §2b UStG.
Reference
Bundestag: Umsatzsteuersenkung Gastronomie 2026
Bundestag: Antwort der Bundesregierung, Drucksache 21/1161