We would like to inform you that, The Tax Department (VAT Service) proceeded to issue a clarifying Circular 11/2022 in relation to the tax treatment of restaurants and catering services. The primary purpose of this circular is to clarify the meaning of:

1. Restaurant and catering services
2. Support services
3. Deliveries of food and beverages for off – premises consumption

1.Restaurant and catering services

Restaurant and catering services, ‘consist in the supply of prepared or unprepared food or drink or both for human consumption accompanied by adequate support services to enable their immediate consumption’

2.Support Services

According to the Administrative Court (AC), support services are a combination of the following elements: kitchen facilities, receiving customers order, preparing and serving the order, provision of a specially designed space for the immediate consumption of food or drinks and cleaning services after consumption.

Based on the above, the circular clarifies that:

1. Businesses that offer food, whether pre-prepared or not, with or without drinks (pre-prepared), impose the reduced rate of 9%. It does not matter if it’s just a drink and no food offered before or after the kitchen closes.
2. Businesses that offer on their premises for immediate consumption only drinks and do not have the possibility of providing meals, except possibly offering accompanying nibbles such as e.g. nuts or chips, also provide services that fall under the reduced rate of 9%. These businesses include bars, discotheques, coffee shops and similar businesses.

3.Deliveries of food and beverages for off-premises consumption

Also, the circular refers to deliveries of food and beverages that are transported from the place of supply for consumption to another place either by the supplier or by the buyer himself or by a third party.

When food is taken away either by the customer (take away) or by the supplier (delivery),

Regardless of the degree of support provided, this kind of supplies are subject to the reduced rate of 5%. The taking away of alcoholic or soft drinks, for consumption outside the business premises are subject to 19% VAT. The reduced rate of 5% applies to water and other drinks such as juices and still drinks.

All the above are valid from the date of its issuance (6/12/2022).