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European Union Finance Ministers have agreed to let Belgium lower the VAT rate it applies in pubs and restaurants.
The ministers reached an accord to allow member states to slash value added tax in a number of labour intensive sectors including the hospitality industry. The reduction will be applied from 1 January 2011.
In addition to the hospitality industry member states can also cut VAT for home renovations.
Belgium has already lowered the VAT on work in homes that are over 5 years old. The rate was cut from 12% to 6%.
It remains unclear what the new VAT rate will be in pubs and restaurants. At present it’s 21%.
The industry is hoping for a cut to 6% but the government may well decide to limit the reduction to 12% to take account of the state of public finances.
Whether the VAT cut will be passed on to the customer is far from certain. Geert van Hecke of the celebrated De Karmeliet restaurant in Bruges (West Flanders) believes prices will stabilise not fall.
flandersnews.be/Expatica