Reduced VAT In Sight For French Catering Industry

by Ulrika Lomas, Tax-News.com, Brussels

23 January 2009

Following years of discussions within the European Union, a reduction in value added tax (VAT) in the French catering industry – promised by erstwhile President Jacques Chirac and subsequently by current President Nicolas Sarkozy – is now a distinct possibility.

During a meeting held in Brussels, French Finance Minister Christine Lagarde and her German counterpart Peer Steinbrück reached an accord on the key issues.

Germany, which has long since proven France’s greatest obstacle to conclusion of the deal, has now acknowledged its willingness to compromise. Although German's Steinbrück has given no firm promises, he has, however, confirmed that the catering sector may form part of the group eligible for a cut in VAT.

According to Didier Chenet, President of Synhorcat, the national catering union (Syndicat national des hôteliers, restaurateurs cafetiers et traiteurs), although the rapprochement marks significant progress, much remains to be done.

Synhorcat wants to see the rate of VAT in the catering industry reduced from 19.6% to 5.5%.

German Finance Minister Steinbrück has made clear that the list of services with a high intensity of manpower, entitled to benefit from reduced VAT, should remain “limited”. Steinbrück is also hoping that the 27 member states will be able to reach an agreement on a reduced VAT rate for ‘ecological’ products and services.

A definite agreement is not expected until March, and must be approved unanimously by the 27 European Union member states.

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