VAT rules in the hospitality industry are not always straightforward. For instance, the rate you apply depends on what you sell. It is therefore good to know which rate applies so that you can file your tax return without any worries. We would like to tell you about the most important VAT rules for catering entrepreneurs.
VAT rates in the hospitality industry
In the Dutch hospitality industry, we apply 2 VAT rates: 9% and 21%. The applicable rate depends entirely on the type of product or service.
- 9% btw: This lower rate often applies to food that can be consumed directly. Think of meals and non-alcoholic drinks you serve in a restaurant or café.
- 21% btw: This higher rate applies to alcoholic beverages and some other exceptions. These include certain luxury products or services not directly covered by the 9% scheme.
Which foods or products is 9% VAT on?
The 9% VAT rate applies to
- Food and non-alcoholic drinks you sell on the spot or as takeaway.
- Coffee, tea, as well as milk and soft drinks.
- Meals served in a restaurant or café.
- Sandwiches and snacks that customers take away or eat on site.
This rate is designed to keep food affordable. It is also worth noting that the tariff applies to both on-site consumption and takeaway.
Which foods or products is 21% VAT on?
The 21% VAT rate applies to:
- Alcoholic beverages. Think beer, wine and spirits.
- Catering services where you hire staff to serve.
- Luxury foods that are not considered staple foods, such as oysters and truffle dishes.
- Other services such as cloakroom or entrance fees.
Do you offer a combination of products with different VAT rates? If so, you must keep the rates separate on the invoice.
What are the exceptions?
However, there are also some important exceptions within the VAT rules in the hospitality sector:
- Hotel stays: Hotels are subject to a different VAT regime with specific rates.
- Catering services: Depending on the situation and service, 9% or 21% VAT is charged here.
- Combination offers: For arrangements that combine food and alcohol, you have to apply the correct VAT rate for each item.
It is important to apply these exceptions correctly in your records. So be keen on this.
What you need to pay extra attention to as a hospitality entrepreneur
- Your receipts and invoices: Make sure you list VAT rates correctly on your receipt and invoices. Can avoid hassles.
- Takeaway vs on-site dining: Some products charge a different rate if they are collected rather than consumed on site.
- Correct VAT return: Make sure you keep accurate records of your sales and the VAT rates charged.
Want to know more about the tax rules around food and drink? Read our article: Is food and drink business deductible?
Frequently Asked Questions
How much VAT on food?
Food and non-alcoholic drinks are covered by the 9% VAT rate. This is different when a luxury product is involved.
VAT on beer?
Beer and other alcoholic beverages are taxed in the Netherlands at 21% VAT.
VAT on drinks?
Non-alcoholic drinks such as coffee, tea and soft drinks are covered by the 9% VAT rate. Alcoholic beverages, on the other hand, fall under the 21% VAT.
How much VAT is on vouchers?
When selling vouchers, the type of voucher determines the VAT rate. In the case of a single-purpose voucher VAT is charged directly. And that while at a multi purpose voucher VAT is calculated only at the time of redemption.
Want to read more about this? Click here!
Do I have to charge VAT on tips?
Tips can be received in two ways, and this determines whether VAT should be charged on them:
- No VAT: Tips given directly to staff (in cash or via a personal payment app) are not subject to VAT. This is considered a gift and not turnover.
- Well btw: Tips that come in via cash register or pin payment and are then distributed to staff by the employer count as turnover and are subject to VAT. The VAT rate depends on the main activity of the catering business (usually 9% or 21%).
