The German Ministry of Finance has officially published the Draft Tax Amendment Act 2025, confirming that restaurant and catering services—excluding beverages—will benefit from the reduced 7% VAT rate from January 1, 2026. This measure, initially introduced as a pandemic relief, now becomes a permanent fixture of the tax code, bringing certainty for the hospitality sector and supporting economic recovery[Gesetz].

Permanent 7% VAT Rate for Restaurant & Catering Services

Scope of Measure

• The 7% VAT rate will apply permanently to food served in restaurants and catering venues across Germany.
• Beverages are excluded from the reduced rate and will continue to be taxed at the standard 19% rate.
• This move marks a transition from temporary relief to long-term support for hospitality businesses, which have advocated strongly for the measure since the pandemic[Gesetz].

Sector Impact

• Restaurants, catering companies, and their clients benefit from lower costs and simpler VAT compliance.
• The measure aims to improve affordability for consumers, sustain employment, and underpin investment in the sector.

Expanded Support for Charitable Activities

Commercial Activity Exemption for Non-Profits

• The exemption threshold for non-profits’ commercial activities rises from EUR 45,000 to EUR 50,000 as of 2026.
• This enables charitable organizations to undertake more fundraising or business ventures without jeopardizing their nonprofit status or facing unrelated business income tax[Gesetz].

Trainer and Volunteer Allowances

• The trainer (“Übungsleiter”) allowance for individuals active in educational, charitable, or sports organizations increases to EUR 3,300 (up from EUR 3,000).
• The volunteer (“Ehrenamtspauschale”) allowance remains EUR 960.
• These allowances provide tax-free compensation for part-time community involvement and are designed to stimulate greater participation in Germany’s volunteer sector[Gesetz].

Practical Implications for Businesses and Nonprofits

• Hospitality Businesses: Update your booking, accounting, and POS systems to reflect the permanent 7% VAT rate on food from January 2026; retain the 19% standard rate on all beverages.
• Charitable Organizations: Monitor gross annual commercial income and utilize the higher EUR 50,000 threshold for tax exemption; review compensation schemes for volunteers and trainers in light of increased allowance limits.
• Individuals: Trainers and volunteers can claim higher non-taxable reimbursements for eligible activities, with part-time involvement in charities or sports clubs incentivized.

Timeline

All measures from the Draft Tax Amendment Act 2025 are scheduled to enter into force on 1 January 2026, providing advance notice and certainty for planning[Gesetz].