Germany to increase VAT on food in restaurants

BERLIN — The German government coalition is likely to raise value-added tax (VAT) on food in restaurants back to 19% from 7%, after reducing it during the energy crisis and COVID-19 pandemic, two sources told Reuters.

Negotiations continued over the coalition’s draft budget to be reviewed in the German parliament.

The budget will be passed at the start of December to take effect from the start of 2024.

The newspaper Bild initially reported that the coalition would not extend the reduction in VAT. The coalition government will also row back on planned cuts to parental allowance for higher earners, Social Democrat MP Felix Doring said.

The cabinet had approved a draft budget in July to halve the income limit for couples eligible to receive parental leave compensation to 150,000 euros, from 300,000 euros previously.

However, in negotiations, the government agreed the limit would instead fall to 200,000 euros from April 1, 2024, and to 175,000 euros from April 1, 2025. — Reuters