Home News EU allows cut-rate sales tax in restaurants

EU allows cut-rate sales tax in restaurants

Published on 06/05/2009

Brussels -- EU finance ministers gave the green light on Tuesday to plans to allow cut-rate sales tax on certain labour intensive services, such as eating out in restaurants, the European Union said.

Their approval, at a meeting in Brussels, closes the book on a long-running quest by France to allow especially low value added tax in its restaurants in the face of opposition from Germany, which Berlin finally dropped in March.

Normally, EU countries cannot apply a VAT rate on retail services and goods of less than 15 percent, in order to avoid big price discrepancies across the EU single market.

Exceptions have to be agreed unanimously by EU governments.

Under the deal approved by the ministers, members states have the option of charging VAT rates of as little as 5.0 percent on a range of labour intensive services in addition to restaurants.

They include repairs on bicycles, shoes, leather goods, clothing and linen; window and house cleaning; domestic care services for the young, elderly, sick or disabled; hairdressing and home renovations.