Thousands of German restaurants may go under when VAT rises

Germany's hotels and restaurants now have little to cheer about this Christmas - the government has just announced it will raise VAT for the food they serve from seven to 19% from January.

Berlin slashed the tax back three years ago when Covid-19 hit the economy.

Restaurant owners are even more aggrieved as, before he was Chancellor, Olaf Scholz had made an election campaign promise that the tax would not return to its pre-Covid rate of 19%

According to DEHOGA, Germany's hotel and restaurant body, thousands of outlets are now at risk.

"This is a catastrophe for our industry, for many businesses. According to a DEHOGA survey, 12,000 companies will not survive. They will either give up or go into insolvency," Ingrid Hartges, DEHOGA's Chief Executive Officer told Euronews.

Germany now joins Denmark, Latvia and Estonia as the countries with the highest VAT rate for food in the European Union, and restaurant owners are worried.

It's the latest blow for restaurants which, like the rest of the hospitality sector, suffered the most in Covid lockdowns and are enduring another winter of high energy costs.

German culinary classics, including schnitzel and currywurst, are likely to see a price increase of two euros per dish, which many people may not be able to afford.

"In the aftermath of corona, in the midst of inflation, we simply cannot handle all of this alone. Unfortunately, the Chancellor did not keep his word, and it is sad that seemingly endless funds are available for wars, but working citizens have to scrutinize every cent more and more," Philipp Satzer,the owner of Alt-Berliner Gasthaus Julchen Hoppe told Euronews.

Takeaways and delivery companies won't however be affected by the VAT rise.