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VAT Cut Requested on Restaurant Deliveries

D&T
April 2, 2020

In order to reduce the severe consequences of the Covid-19 crisis on domestic restaurants, Wolt, a food delivery company, is asking the government to reduce the 27% tax rate of food consumed outside restaurants (takeaway, delivery) to 5% that applies to food eaten at restaurants.

The turnover of restaurants has decreased dramatically in the recent past due to the Covid-19 virus and the restrictive measures that have been rightly introduced as a result. Due to the almost complete cessation of local consumption, home delivery of food is now not only a significant to restaurants but an exclusive source of revenue. At the same time, fixed costs are high in the restaurant sector: the cost of raw materials needed for production, workers' wages and rents – all amounts are to be paid continuously. In addition, the sharp decline in the number of guests and the expected slow recovery in demand threaten the survival of restaurants not only now but also in the medium and long term. Thousands of Hungarian companies could thus find themselves in a situation close to bankruptcy.

At the same time, it is clear that contactless food delivery through technology platforms can make a major contribution to the government’s efforts to achieve responsible social isolation. Food delivery as part of the supply chain greatly supports the reduction of the number of contacts required, while ensuring quality care in the area of ​​varied meals for those who choose to stay at home responsibly, which is essential for maintaining health or even improving mood.

However, the VAT law currently in force makes a distinction between the VAT on food consumed locally and that sold as takeaway, which is not justified in the current situation. That is why a letter sent by the food transport company Wolt to Mihály Varga, in which it asked for the reduction of the VAT content of food sold by restaurants as takeaway and with delivery from the current 27% to 5% applied to locally consumed food. The signing of the letter sent to the Minister of Finance was joined by the Hungarian Catering Industry Association and the owners of 500 restaurants representing the interests of about 2,500 employees.

D&T

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