Tax Cut for Hospitality Industry - What It Means - Germany slashes VAT for restaurants and hotels to ease financial pressure
Restaurants, hotels, and guesthouses across Germany now pay less VAT on food served to customers. The rate dropped from 19% to 7% at the start of 2026, bringing it in line with takeaway and delivery meals. In Thuringia, the change is expected to save the hospitality sector around €72 million each year.
The tax cut aims to address long-standing inequalities in how food services are taxed. Takeaway and delivered meals already benefited from the lower 7% rate, while dine-in meals faced the full 19%. Officials have described the adjustment as a move toward fairer taxation.
Many businesses in Thuringia have struggled for years with rising labour costs, leaving little room for investment. The VAT reduction now offers some financial breathing space. Around 3% of local hospitality firms believe conditions will improve soon, but 53% expect stagnation, and 44% predict further decline.
Rural areas in the state face particularly tough challenges. Energy and food costs remain high, squeezing profits even as revenues stall. While the tax savings may not lead to cheaper menus, they could help prevent further price hikes. Some owners plan to use the extra funds to finally upgrade equipment or renovate premises.
The VAT reduction provides Thuringia’s hospitality sector with roughly €72 million in annual relief. This money may not lower prices for diners, but it could stabilise them and fund overdue improvements. For many businesses, the change comes as a much-needed lifeline after years of financial strain.
