French restaurants are expected to cut prices on meals and soft drinks after the government slashed value added tax from 19.6% to a lowly 5.5%. The move, approved by the European Union, follows years of French lobbying in Brussels. The French government has slashed value added tax (VAT) for the restaurant business from 19.6% to a significantly lower 5.5%, moving to satisfy a long-term demand from the industry. The tax applies to food but not to alcohol consumption. This drop signals lower overall prices for consumers, since dining prices in France include VAT. Establishments are not legally bound to lower their prices as a result of the VAT drop; if they choose not to, they have the right to keep the same prices as before and pocket the difference. Nonetheless, economic minister Christine Lagarde is confident that restaurants are likely to be motivated to implement a price drop in order to stay competitive. She said "The market will prove wrong" those who do not.
The French government has slashed value added tax (VAT) for the restaurant business from 19.6% to a significantly lower 5.5%, moving to satisfy a long-term demand from the industry. The tax applies to food but not to alcohol consumption. This drop signals lower overall prices for consumers, since dining prices in France include VAT. Establishments are not legally bound to lower their prices as a result of the VAT drop; if they choose not to, they have the right to keep the same prices as before and pocket the difference. Nonetheless, economic minister Christine Lagarde is confident that restaurants are likely to be motivated to implement a price drop in order to stay competitive. She said "The market will prove wrong" those who do not.
The next time you get the bill for a coffee and croissant in France, you're likely to get a shock. The price will have dropped by around twenty percent. The French government has slashed value-added tax (VAT) for restaurant and cafe owners from over 19 percent to just 5.5 percent. Industry bodies say the move will be good for both the consumer and the employment market. Both the big restaurant chains and many smaller restaurants have said they will pass on the tax cut to their customers. That means an average espresso will now cost just 1 euro ($1.40), a drop of 20 euro cents.
The French government has slashed value-added tax (VAT) for restaurant and cafe owners from over 19 percent to just 5.5 percent. Industry bodies say the move will be good for both the consumer and the employment market.
Both the big restaurant chains and many smaller restaurants have said they will pass on the tax cut to their customers. That means an average espresso will now cost just 1 euro ($1.40), a drop of 20 euro cents.
