Currently (until 2nd October) the world greatest folk festival “Oktoberfest” takes place in Munich. Just in time the German Federal Tax Court decided on the VAT rate for pretzels (BFH, decision dated 3.8.2017 – V R 15/17).
The plaintiff has a sales stand at the Oktoberfest and sells pretzels. For selling pretzels he also goes into the beer tents, where the visitors of the October festival sit on benches, enjoy the famous German beer and listen to brass bands playing traditional Bavarian music. The German tax authorities took the position that the sale of pretzels must be seen as restaurant and catering services. These services would be subject to the standard VAT rate of 19 %. However, the supreme court did not agree and argued that Pretzels are a standard dish of the simplest kind. The consumption does not require any kind of auxiliary device. Moreover, the equipment in the beer tents such as tables and benches are provided by the beer tent operator and cannot be attributed to the pretzel salesman.
As a result, the pretzels are seen as a delivery subject to the reduced German VAT rate of 7 %. But beware: If the “Wiesn-Brezn” is ordered from the beer tent operator in the beer tent the full VAT rate is applicable….