VAT On Take-Away Food From Snack Stalls

October 2011

The German Bundesfinanzhof (BFH, or federal fiscal court) has responded to the rulings made in the European Court of Justice (ECJ) earlier this year on the rates of VAT to be applied to food sold in snack bars.

In its decision published on 30th June and reported to us by our colleagues in the Association of German Amusement Parks (Verband Deutscher Freizeitparks and Freizeitunternehmen - the VDFU), the BFH has decided that:

• Simple foods such as sausages and chips/French fries which consumers eat while standing (at the snack-bar counter, for example) will be taxed at the lower rate of 7% that applies to the sale of foodstuffs in Germany.

• If customers are offered tables and chairs at which to eat their snacks, the food will be taxed at the higher rate of 19% that applies in restaurants.

We reported the ECJ ruling earlier this year. Responding to four cases referred by the German government, the court had decided that the supply of food or meals freshly prepared for immediate consumption from snack stalls and mobile snack bars was a supply of goods, not services. The VAT applied should therefore be at the rate applied to the sale of 'foodstuffs' rather than the one applied to restaurant and catering services. The distinction made by by the Bundesfinanzhof hinges broadly on whether consumers are standing or seated.

If we receive further information on the practicalities of the BFH's decision, we will, of course, pass it on to members.

April 2011

A recent ruling in the European Court of Justice (ECJ) could have implications for the sale of food from snack stalls in visitor attractions across Europe.

Responding to four cases referred by the German government, the court has ruled that the supply of food or meals freshly prepared for immediate consumption from snack stalls and mobile snack bars is a supply of goods, not services. The VAT applied should therefore be at the rate applied to the sale of 'foodstuffs' rather than the one applied to restaurant and catering services.

Many member states apply reduced (or even zero) rates of VAT to sales of foodstuffs from shops and supermarkets, although the precise rate applied may depend on the type of food being sold.

Fewer member states apply them to restaurant and catering services. Those that do include countries such as France, Italy, Netherlands and Spain. A directive adopted by the EU in 2009 (2009/47/EC) allows all member states to apply reduced VAT rates to restaurant meals and certain other local, labour-intensive services if they wish to.

According to an ECJ press release published on 10th March, the supply of food from snack stalls and mobile snack bars "is a supply of goods if a qualitative examination of the entire transaction shows that the elements of supplies of services preceding and accompanying the supply of the food are not predominant". Snack bar "activity consists in the supply of food or meals for immediate consumption, and the summary and standard preparation of the food is intrinsically linked to the food".

The facilities for customers to consume their food on the spot are also an important consideration. In two of the German cases, the businesses concerned provided limited sheltered areas for people to eat their snacks. Such facilities were regarded by the court as being, in the words of the press release, as being of "a merely ancillary and subordinate nature".

The court defines 'foodstuffs' as "food and meals which have been prepared for immediate consumption by boiling, grilling, roasting, baking or other means".

The full text of the ECJ press release can be found on the court's website.

The judgement itself is available here.