French restaurants lower taxes!

Bills in restaurants and cafés across France should finally start dropping from this morning.

The French government has cut value-added tax for the restaurant trade from 19.6% to 5.5%. In theory that should mean an 11.8% fall in prices, with a €30 bill dropping to €26.40.

TVA (VAT) is down, and prices too

France has been campaigning for seven years to get the EU’s go-ahead to lower VAT (or TVA – Taxe sur la Valeur Ajoutée) for restaurants and cafés.

But lowering prices isn’t obligatory under the new measure. Proprietors have the right to keep the same prices as before and pocket the difference.

What to look out for

Let’s see what the market says – and in the meantime look for a sign saying “La TVA baisse, les prix aussi” (VAT is cut, prices too) outside establishments taking part.

Restaurants have also pledged to cut the pre-tax prices of at least 10 identified products such as an espresso, plat du jour etc. The tax cuts apply to food but not to alcohol.

The reduction will reportedly cost the French state €2.38 billion a year – substantially down from the €3.25 billion they were talking about in March.

One third of the VAT cut is theoretically supposed to help pay for the price cuts with another third going to increase staffing. The final third should go to improving restaurant facilities. Great – new loos!