The planned reduction in Value Added Tax (VAT) for the hospitality sector, slated to take effect on January 1, 2026, is facing immediate skepticism regarding its potential impact on consumer prices. Industry representatives are warning that the tax cut, intended to alleviate financial pressures, will likely be entirely offset by the concurrent increase in the minimum wage, effectively negating any prospect of reduced costs for diners.
Thomas Geppert, State Managing Director of the Dehoga Bayern (the Bavarian Hotel and Restaurant Association), acknowledged the tax reduction could initially “cushion” rising costs, but emphasized that broader economic trends require continued efforts towards relief. His comments, published in Bild am Sonntag, suggest the VAT reduction is viewed more as a necessary measure to maintain current pricing rather than a trigger for price decreases.
Similar sentiments were echoed by Patrick Rothkopf, President of Dehoga Nordrhein-Westfalen, who highlighted the “extremely tense situation” within the sector, compounded by persistently high operational costs. Rothkopf’s assessment, also featured in Bild, explicitly stated that price reductions are unlikely in the face of the looming minimum wage hike, scheduled to raise the hourly rate from €12.82 to €13.90.
The decision by the Bundesrat (Federal Council) to permanently lower the VAT rate on restaurant meals from 19% to 7% was presented by the government as a significant economic stimulus. However, the simultaneous increase in the minimum wage has drawn sharp criticism, raising questions about the government’s broader economic strategy and its understanding of the pressures faced by small and medium-sized businesses. While the tax reduction aims to offer some respite, the expected impact on consumer prices is now deeply uncertain, prompting concerns that the move may prove largely symbolic rather than a genuine benefit for the German public. Analysts are now scrutinizing whether this policy divergence will exacerbate existing labor shortages within the hospitality industry and further complicate efforts to manage inflation.