The German government is urging states to expedite the implementation of a planned reduction in Value Added Tax (VAT) for the hospitality sector, citing significant revenue losses impacting businesses nationwide.
Christoph Ploß, the Federal Government’s Coordinator for Maritime Affairs and Tourism, emphasized the critical importance of securing agreement on the VAT reduction within state legislatures (Bundesrat) to complement the already approved measure in the Bundestag. He stated that swift action is essential for the entire tourism industry and its constituent establishments.
The coalition government aims to lower the VAT rate on food from the current 19% to 7% starting January 1st. Thomas Geppert, head of the Bavarian Hotel and Restaurant Association (Dehoga), described the reduction as an “unavoidable necessity” highlighting the escalating costs of labor, energy, food and administrative burdens impacting the sector.
Geppert explained that while costs have dramatically risen, many businesses are unable to fully pass those increases onto consumers, fearing a decline in patronage. This situation is eroding profit margins, depleting reserves and contributing to ongoing revenue decreases. He stressed that the call for a return to the 7% VAT rate from January 2026 isn’t driven by political considerations but reflects a genuine and pressing need.
Beyond financial pressures, the hospitality sector is also grappling with challenges related to business succession. Ploß acknowledged that many potential acquisitions are failing due to bureaucratic obstacles. To address this, the government has introduced a “Practical Check” for new and successor businesses, including within the hospitality sector. This initiative aims to provide tailored solutions and support, such as subsidized KfW bank loans, to facilitate smoother transitions and ensure the continued viability of businesses.
