Can restaurants charge vat on food?

Can restaurants charge vat on food?

If you’ve ever been to a restaurant and seen the “”VAT”” charge on your bill, you may have wondered what it is and why restaurants are allowed to charge it. VAT, or Value Added Tax, is a tax levied on the sale of goods and services in the European Union. In most countries, the standard VAT rate is 20%, but in some countries it is lower, like Ireland where it is 13.5%. Restaurants are allowed to charge VAT on food because they are considered “”catering establishments”” under EU law.

What is VAT?

Value-Added Tax (VAT) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. The tax is usually imposed on the seller, but it can also be levied on the purchaser. VAT is typically implemented as a percentage of the price of the good or service.

In most countries, VAT is charged on all goods and services except for those specifically exempt, such as food and medical supplies. Restaurants are generally required to charge VAT on their food and beverage sales. However, there may be some exceptions depending on the country in which the restaurant is located. For example, in the United Kingdom, restaurants can choose to register for VAT if they make less than £85,000 in annual sales.

If you are planning to open a restaurant, it is important to research the VAT requirements in your country so that you can properly budget for this expense.

How is VAT calculated on restaurant bills?

VAT is calculated on restaurant bills in the same way as it is calculated on any other type of bill. The total amount of the bill is added up, and then VAT is added at the appropriate rate. For example, if the bill came to £100 and the VAT rate was 20%, then the total amount payable would be £120.

What are the benefits of charging VAT on restaurant bills?

There are a few benefits to charging Value-Added Tax (VAT) on restaurant bills. For one, it can help businesses recoup some of the costs associated with providing food and drink services. Additionally, VAT can provide an incentive for customers to patronize a particular restaurant over others. Finally, charging VAT may help to level the playing field between restaurants and other businesses that are subject to the tax.

Are there any drawbacks to charging VAT on restaurant bills?

As a restaurant owner, you may be wondering if there are any drawbacks to charging VAT on your customers’ bills. After all, VAT is a mandatory tax in many countries, so why not charge it?

However, there are a few things to consider before you start charging VAT on your restaurant bills. First of all, VAT is a value-added tax, which means that it is levied on the price of goods or services. This means that if you charge VAT on your restaurant bills, your prices will increase. This could deter some customers from eating at your restaurant, as they may perceive your prices as being too high.

Another thing to consider is that charging VAT may make your restaurant appear less competitive than other restaurants in the area who do not charge VAT. This could impact your business negatively, as customers may choose to eat at a different restaurant where they perceive the prices to be lower.

Overall, charging VAT on your restaurant bills can be beneficial in terms of generating additional revenue for your business. However, you should weigh up the potential drawbacks before making the decision to do so.


It’s a common misconception that restaurants can charge VAT on food. In fact, they can’t. VAT is only applicable to goods and services, and food is considered neither of these things. So, if you see a restaurant charging VAT on food, be sure to let them know that they’re not allowed to do so!