Filenews 13 December 2022 - by Eleftheria Paizanou
From now on, consumers will pay less VAT when they consume their drinks, whether alcoholic or not, in bars, nightclubs, cafes, pubs and clubs.
Until recently, according to the interpretation of the law given a few years ago by the previous Tax Commissioner, taxpayers when they consumed only drink in the above places paid 19% VAT. But if they enjoyed their drink in a restaurant and it was accompanied by food, they paid 9%. A court decision changes the situation in case citizens consume drinks in bars, clubs, etc. and a VAT of 9% will now be imposed in these cases as well.
Under the VAT Law, restaurant and restaurant services are subject to the reduced VAT of 9%. According to the provisions of the legislation, "restaurant and catering services are services consisting in the supply of prepared or unprepared food or beverages, or both, for human consumption, accompanied by adequate support services to enable their immediate consumption. The supply of food or drink or both is only one element of the whole in which services largely excel. Restaurant services shall cover the provision of such services on the premises of the supplier and restaurant services shall cover the provision of such services outside the premises of the supplier'.
According to the decision of the Administrative Court, support services include any combination related to the operation of the kitchen, order taking services, preparing and serving the order and providing a landscaped and furnished space for the immediate consumption of food or beverages. Therefore, based on the above data, consumers will henceforth have to pay only 9% VAT on the consumption of beverages, however, the question that arises is whether the owners of bars, cafes and nightclubs will proceed to reduce prices from the price lists, since they will need reduced VAT.
For this reason, consumers should have their eyes set on receipts to see whether they have been taxed correctly and that owners who provide food services have not made any additional profit.
A relevant circular was also issued by the Tax Commissioner Sotiris Markides, in which he states that after the provisions of the law and the court decision, 9% VAT will now be imposed on drinks. As pointed out in the circular, the following points have been interpreted in relation to restaurant and catering services.
- For all services provided by businesses that have the ability to offer food, the reduced VAT rate of 9% should be imposed on all customers, regardless of whether they order only food, only drinks or both (food and drink) and regardless of whether at some point in time the kitchen closes and the business in question continues to operate.
- Businesses such as pubs, bars, discotheques, cafes or other entertainment venues that serve only drinks and that may not be able to provide a meal, but offer adequate support services, which make it possible to consume drinks directly on their premises, are considered to provide services that can be included in the above provisions and therefore these services are charged with the reduced VAT of 9%.
The Superintendent clarifies that the delivery of food and/or beverages by a business, for consumption outside its premises and without being accompanied by adequate support services, continue to fall under the provisions of the legislation and are charged with 5% VAT. Deliveries of soft drinks and alcoholic beverages through take away and delivery are subject to the standard VAT rate.
