Restaurants’ joy at tax decision

CATERING industry representatives have hailed a victory with the first step towards reducing VAT in their sector.

EU finance ministers have agreed on a number of industries which could benefit from reduced VAT levels, including the catering sector, construction, rennovation, home help and hairdressing.

Once the EU has passed legislation it will be up to individual member states to decide on the level of VAT levied in these sectors.

Economic relaunch minister Patrick Devedjian said: “The VAT rate in the catering sector should be as low as possible to have an impact on employment.”

He said the sector was a good arena for creating jobs.

Any new level will not come into force until 2010. New proposals must be drawn up by the European Commission and ratified by all member states.

VAT is the government’s biggest earner – €130 billion last year.

Budget minister Eric Woerth said a reduction in VAT to 5.5% in the catering sector could lose the state one billion euros.
Synhorcat – the union of hoteliers, cafes, restaurants and caterers – said the decision was a “victory”.