VAT in restaurants: Definitive guide

VAT in restaurants is an important aspect for every business in Spain. For this reason, there should be no doubts about this issue.

Restaurants and other hospitality businesses charge a specific type of tax, but what happens if I want to charge another type of tax in the restaurant? what products should be taxed? do I apply VAT to everything?

We insist, the VAT in restaurant is a subject that should not harbor any type of doubts and to clarify the possible doubts, we invite you to read this work.

VAT for restaurants What is it?

The value added tax, better known as VAT, is a type of indirect tax that is placed on the value of the products you sell in your restaurant.

Indirect taxes are taxes that are charged on the consumption of products or services that are consumed. As you can see, restaurants fall under this definition

VAT in restaurants is commonly 10%, i.e., reduced VAT. But that could vary if the establishment is subject to some exceptions to the rule.

Being an indirect tax, VAT in restaurants is not considered within the restaurant’s income tax return, but it is charged by the restaurant in the invoice at the end of the consumption of each product or service.

X-ray of VAT for restaurants

VAT in restaurants is a complex issue, because they are businesses that sell products and services that have different types of value added taxes.

You can consume bread, which is subject to VAT at 4%, or a glass of wine, which is subject to 21% because it is alcohol. However, in the restaurant everything is taxed at 10% VAT, making the application of the rule a little simpler.

But the greatest possibility of confusion is when we find mixed restaurant and recreation services in the same premises.

How to establish which VAT applies?

Everything will depend on the main activity at the time the mixed service is rendered.

Let’s see an example that clarifies everything.

If a restaurant has live music, 10% will be charged, since the main service is the restaurant.

On the other hand, a concert hall where the restaurant service is offered, VAT will be calculated at 21% because the main reason is the concert and not the food that -in this case- is offered as an accompaniment.

VAT rates for restaurants

VAT is divided into three rates: normal, reduced and super-reduced . Each of the VAT rates is intended for different economic activities.

However, every business is obliged to clearly inform customers about the VAT rate charged in the restaurant

Normal VAT

Normal VAT is charged at 21% on any type of business, including some gastronomic establishments.

This VAT rate is used in any transaction involving the purchase of goods or services.

Reduced VAT

Reduced VAT is charged at 10% and is generally used by businesses in the hospitality sector.

It is also used for transactions of health products such as medicines or prostheses, payment of services such as water, products from livestock and agriculture, opticians or payments in the real estate sector.

Super-reduced VAT

The super-reduced VAT is charged at 4% and is used to pay for products classified as basic necessities.

These products and services include medicines, personal assistance and subsidized housing

Is it possible to deduct this tax in restaurants?

By law, VAT in restaurants can only be deducted in cases related to the professional activity of the establishment.

VAT is deductible in restaurants when planning a business lunch with potential suppliers or clients of your company.

To do so, it is necessary to keep the invoice for payment and to prove that the meal was held for business purposes.

On the other hand, a dinner between co-workers cannot be deducted. This is because they are actions outside working hours and have nothing to do with the company’s purposes.

Do you have to include VAT on the menu?

In order to inform customers, VAT in restaurants must be included in the menu and in your restaurant’s invoice.

Taking into account Law 44/2006 of December 29, 2006, instead of placing the prices without VAT and indicating the percentage of VAT that your restaurant charges, you have to place the price with the tax included.

That way, customers will know – more easily – the total amount to be paid and will not incur in violations of the Law.

Products that cannot be missing in your restaurant

Your restaurant must be equipped with products for the hotel and catering industry that are certified and have a quality guarantee.

In our online store, Monouso, we offer tableware, packaging and supplies in general to meet the needs of your business, allowing you to offer a quality service to all your customers.

Within our catalog you will find plastic products and biodegradable options, so that your choice goes hand in hand with the style of your restaurant business.

The best thing is that once you place your order, you must wait between 24 to 48 hours for it to arrive at the address of your convenience.