June 12, 2020 / 10:48 AM / a month ago

Austria plans temporary VAT cut for restaurants, culture

VIENNA (Reuters) - Austria plans to cut value-added tax (VAT) for restaurants and the culture sector to 5% until the end of the year to help them cope with the fallout from the coronavirus pandemic, the government said on Friday.

The plan will be finalised at a two-day government meeting starting on Monday at which other stimulus measures will also be hammered out, ministers said. Austria also needs approval from the European Commission for the move.

“We will ... implement a reduction of value-added tax in gastronomy (cafes, bars and restaurants), in culture sectors and in the area of publishing,” Finance Minister Gernot Bluemel told a news conference, adding that the 5% level would apply until the end of the year

The move will cover items including cinema and museum tickets, books and newspapers, the junior minister for culture, Andrea Mayer, said, adding that cultural businesses have various rates, mainly 10% and 13%. Food and drink sold in hotels would also be affected, Tourism Minister Elisabeth Koestinger said.

The conservative-led government has previously announced a VAT cut for non-alcoholic drinks in cafes, bars and restaurants to 10% from 20% as of July 1, saying that European rules do not allow a VAT cut on alcoholic drinks. It now wants Brussels to grant it a waiver so it can reduce VAT on alcoholic drinks.

“We are working here with the European authorities on a temporary exception because in this special situation it should also be possible to help and support these particularly hard-hit sectors exceptionally and temporarily,” Bluemel said.

Reporting by Francois Murphy; Editing by Catherine Evans and Pravin Char

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