Thousands of German restaurants may go under when VAT rises

"12,000 companies will not survive. They will either give up or go into insolvency," Ingrid Hartges of DEHOGA, the hotel and restaurant body, said.

Transcript

00:00Germany's hotels and restaurants have little to cheer about this Christmas.

00:04The government's just announced it will raise VAT for the food they serve from 7 to 19 percent in January.

00:11Berlin had slashed the tax three years ago when COVID-19 hit.

00:15This is a catastrophe for our industry, for many companies.

00:20According to the Dehoga survey, 12,000 companies will not survive.

00:25They will give up or go into insolvency.

00:29Germany now joins Denmark, Latvia and Estonia, all seen here in red as the countries with the highest VAT rate in the EU,

00:37according to Dehoga, which represents Germany's hotel and restaurant industry.

00:41The fear is that customers won't be able to afford the higher prices.

00:59It's another blow to hotels and restaurants, which suffered the most in the COVID lockdowns

01:04and are enduring another winter of high energy costs.

01:11It's an option.

01:13Going to the restaurant and being among people is more pleasant.

01:18That's why I think we should stick to it.

01:21Germany's signature dishes, such as schnitzel and currywurst, are likely to see a price increase of 2 euros per dish.

01:28Many people may not be able to afford it.

01:31German restaurant owners are angry with the government for breaking their promise to keep the tax down at 7 percent.

01:36The increase only affects restaurants serving their food on porcelain plates and not takeaway or delivery companies.

01:42The question remains in the new year.

01:44Will people continue to eat out or will they see it as a luxury they can no longer afford?

01:49Liv Stroud in Berlin for Euronews.