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After a shopping trip in Konstanz or Lörrach, many Swiss shopping tourists stay in Germany for a cheap dinner. But be careful: food in the neighboring country will soon not be so cheap anymore.
The German government decided to increase VAT in the catering industry from 7 percent to 19 percent. Here’s what you pay: Previously, VAT was charged at 2.10 euros for a 30-euro meal at the restaurant, including drinks. It will soon be 5.70 euros.
Low tax rates led to billions of dollars in losses
The new VAT rate will come into force from 2024. This means that German politics is back to normal: VAT in the catering sector was already at 19 percent. Following the corona epidemic, tax rates were temporarily reduced to ease the burden on restaurant operators. Since then, the discount has been extended several times, for example because restaurants, bars and cafes have faced higher energy prices since the outbreak of war in Ukraine.
But German politicians now show enough tolerance for the catering industry. For the state, the tax exemption will result in losses of billions of dollars. So the low tax rate will end soon.
German restaurants rely on Swiss customers
Restaurant operators are sounding the alarm about a return to higher tax rates: They warn of a wave of bankruptcies. VAT is applied to customers, not the restaurant. But German restaurants fear customers will stay away due to rising prices. Baden-Württemberg Consumer Protection Minister Peter Hauk (62, CDU) warned SWR that 2,000 out of 25,500 businesses could be lost in the federal state of Baden-Württemberg, which borders Switzerland.
Particularly in border areas, German restaurateurs are likely to continue hoping to find wealthy Swiss customers to avoid too many bankruptcies. However: Bundestag Member of Parliament Karin Keller-Sutter (59, FDP) recently announced that she will reduce the value-exempt limit for shopping tourists from 300 francs to 150 francs. This means that anyone who buys more than 150 euros in Konstanz, Lörrach or elsewhere must pay Swiss VAT at customs.
Shops are dying in Switzerland
This aims to disrupt the Swiss shopping spree in the neighboring country and strengthen local retailers. Shopping tourism makes life difficult for shops, especially in eastern Switzerland. Shopping tourists not only avoid Swiss VAT, but can also claim back German VAT. And they benefit from generally lower prices in Germany.
Shopping tourism is not just a marginal phenomenon: According to a study, Switzerland purchased 8.5 billion francs from abroad in 2022. Money missing from local retailers’ tills.
The lower value exemption limit is planned to come into force from 2025. One look at the SonntagsBlick in Konstanz already shows this: Many shopping tourists do not want to miss a shopping trip, even if the value-exempt limit is lower. This also gives hope to German restaurateurs.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
