Tax & Legal

In the course of the Tax Amendment Act 2025 a reduction of VAT for restaurant and catering services, with the exception of the sale of beverages, to seven per cent was introduced from 1 January 2026 (Section 12 (2) No. 15 of the Value Added Tax Act). The Federal Ministry of Finance (MoF) has recently issued a brief decree as to specific aspects of the new rule.

According to a decision of the Supreme Tax Court the author of works of art for the purpose of the reduced VAT rate as provided in Section 12 (2) No. 13 VAT Act is the (intellectual) creator of the work and not his or her successor in title. The question of authorship for VAT purposes must be answered in accordance with the provisions of the Copyright Act.

The reduced Value Added Tax (VAT) rate does not only apply to the rental of land and the buildings fixed to it, but also in general to the rental of living and sleeping quarters by an entrepreneur for the short-term accommodation of strangers. According to the Supreme Tax Court this also includes the renting of non-stationary living containers to harvesters (seasonal workers).

Can an eloquent funeral speech be of artistic nature or comparable to performing artists and thus fall under the categories of services subject to the reduced VAT rate of 7 percent? No – says a tax court of first instance.

A Member State which provides for a reduced tax rate for supplies of firewood according to Article 122 of the VAT Directive may limit its scope to certain categories of supplies of firewood based on the combined nomenclature, provided that the principle of fiscal neutrality is observed. With this decision the European Court of Justice answered a request for a preliminary ruling by the Supreme Tax Court. The latter has now issued its final judgment in the case referred.

When using a food-court in a shopping mall the services of a fast-food provider may not be a delivery of food (for which the reduced VAT rate is applicable) but rather a service subject to the standard VAT rate if - as the Supreme Tax Court points out in a most current decision - it is evident from the perspective of an average consumer that the provider of the food has a facility at his disposal on the nearby premises. This, e.g., may be the case if a tray is provided for transporting the purchased food to a consumption facility located in the food-court.

Services in connection with hotel accommodation are subject to the reduced VAT rate, this also applies to ancillary services – inasmuch as they immediately contribute to the letting of rooms.

The ECJ has held that the reduced VAT rate for books must be extended to e-books if the average consumer is likely to perceive the two products as essentially similar.

An ECJ advocate general has suggested the court rule that it is for the national court to decide whether e-books are seen as comparable to printed books by the local market and therefore eligible for the same reduced rate of VAT.

The Supreme Tax Court has followed the ECJ in holding that a party service provides more than the mere supply of hot and cold food and thus performs a service chargeable to standard rate VAT.

The finance ministry has decreed that the reduced rate VAT on theatre tickets does not extend to charges to theatres for performances by a visiting company under its own director.

The finance ministry has extended the reduced rate VAT on theatre ticket sales to include retail sales.

The ECJ has held that the sale of prepared hot and cold snacks from stalls and stands for immediate consumption is taxable at the reduced rate as the sale of foodstuffs. Party service deliveries, by contrast, are services taxable at the standard rate.

The ECJ has held that the reduced rate of VAT on the sale of horses may only be applied to the sales of those intended for human consumption or for feeding to other animals.