Trade Union Chief Against Lower Restaurant Tax

A planned VAT cut for restaurant meals in Germany has sparked debate between industry leaders and unions. From January 1, 2026, the rate will drop from 19% to 7%, but not everyone supports the change. Guido Zeitler, head of the hospitality union NGG, argues the move will cost public budgets nearly €4 billion a year without guaranteeing benefits for workers.

The German Hotel and Restaurant Association (Dehoga) has suggested that businesses should decide how to use the VAT savings. Some may choose to lower prices for customers, while others could keep the extra revenue. The association has not pushed for a mandatory price reduction.

Guido Zeitler, however, opposes the permanent VAT cut. He claims that employers rarely pass tax savings on to staff, pointing to a 2010 VAT reduction for hotels as an example. According to him, the change would mainly benefit high-end diners rather than industry workers.

Zeitler also warned that the state would lose nearly €4 billion annually in tax revenue. He believes this money could be better spent on direct support for hospitality staff, such as housing benefits, wage top-ups, and affordable public transport.

The Finance Ministry, led by Lars Klingbeil, has not commented on whether the VAT reduction will become permanent. The new 7% rate is set to take effect in 2026, but the wider financial and social impact remains a point of contention.

The VAT cut will reduce costs for restaurants starting in 2026, but its long-term effects are still unclear. Businesses will have the freedom to decide how to use the savings, while unions warn of lost public funds. The debate highlights differing views on how best to support the hospitality sector and its workers.