Germany's 7% VAT Cut Fails to Lower Restaurant Prices or Boost Wages

A tax break meant to help diners and staff is lining owners' pockets instead. Workers and customers ask: Where's the relief we were promised?

, and Administrator

2026 February 25 . 7:19 PM

1 min read

The image shows a restaurant with wooden tables and chairs in front of a large window, surrounded... — The image shows a restaurant with wooden tables and chairs in front of a large window, surrounded by plants, lights, and other objects. Through the window, we can see people walking on the road, buildings, poles, boards, and the sky. This restaurant is located in Berlin, Germany, and is one of the best restaurants in the city.

Germany's 7% VAT Cut Fails to Lower Restaurant Prices or Boost Wages

Germany's hospitality sector has seen a reduced VAT rate of 7% on restaurant food near me since January 2025. Yet, despite the tax cut, prices for meals have not fallen, and wages remain unchanged. Data from the Statistical Federal Office shows restaurant visits cost 3.6% more this January than last year across the country.

The VAT reduction was intended to ease financial pressure on businesses and customers. However, in Wiesbaden, a schnitzel still costs the same as before, and similar trends appear nationwide. In Bayern, restaurant prices rose by 3.9% in January 2025, proving no regional exceptions exist.

Around 620 restaurants, bars, and cafés in Wiesbaden benefit from the lower tax rate. But according to the Food, Beverages, and Catering Union (NGG) Rhein-Main, neither staff nor diners see direct advantages. The union claims that for every €10 spent, owners keep an extra 95 cents due to the VAT cut.

Robert Mangold, president of DEHOGA Hessen, defends the policy, stating it creates tax fairness between dine-in and takeaway services. Meanwhile, the Hessian Hotel and Restaurant Association (DEHOGA) is reinvesting the extra revenue. Funds go towards training, quality improvements, and safeguarding jobs. The sector employs roughly 7,200 people in Wiesbaden, with qualified professionals earning €16.74 per hour under union agreements.

Hendrik Hallier, managing director of NGG Rhein-Main, criticises the lack of wage increases. He accuses some restaurateurs of prioritising profits over fair pay for employees.

The reduced VAT rate has not led to cheaper meals or higher wages in Germany's hospitality industry. Instead, businesses are using the savings to modernise operations and upskill staff. With prices rising and wages stagnant, the policy's impact remains limited for both customers and workers.