19 or 7 Per Cent? Which Rate Applies to Which Supply
The question of the correct rate sounds trivial, but it is not. It decides twelve percentage points — on annual turnover of €200,000 net that is €24,000. Get it wrong and you may be correcting the position years later, with interest. This article sorts out the most important cases.
The basic rule: 19 per cent unless it is on the list
The VAT Act works with one rule and one exception. The rule is in section 12(1) UStG: 19 per cent for every taxable supply. The exception is in section 12(2) UStG, a numbered list referring to Annex 2 of the Act. Only what is expressly named there is taxed at 7 per cent. There is no discretion and no industry logic — all that counts is whether your particular supply appears on the list.
The reduced rate at a glance
The 7 per cent bracket covers, among other things: most foodstuffs, books, newspapers and magazines including their electronic editions, local passenger transport over distances below 50 kilometres, short-term accommodation in hotels and guesthouses, admission to theatres, concerts and museums, supplies by charitable bodies, dental technicians' work and agricultural produce. Since 2026 restaurant and catering services have been added.
What changed for hospitality in 2026
Until the end of 2025 the notorious two-tier treatment applied: eating in the restaurant meant 19 per cent, taking the same dish away meant 7 per cent. That produced absurd questions at the counter — a standing table could change the rate. With section 12(2) no. 15 UStG the reduced rate has applied uniformly to restaurant and catering services since 1 January 2026, permanently and without a sunset date.
The exception is written into the statute itself: with the exception of the supply of drinks. Beverages therefore stay at 19 per cent. For a restaurateur this means every bill and every receipt now contains two rates. It affects not only restaurants and cafés but also caterers and canteens in companies, hospitals, schools and nurseries. How a mixed bill splits can be traced item by item in the VAT calculator.
Food: the classic borderline cases
Not everything within the food category is reduced-rated either. Drinks are generally taxable at 19 per cent — with the exceptions of milk, milk mixed drinks with a milk content of at least 75 per cent, and tap water. Bottled mineral water, by contrast, is fully taxable. Alcohol, confectionery falling under certain customs tariff headings and luxury items such as lobster or caviar likewise sit at the standard rate. Anyone working in retail cannot avoid a look at Annex 2 to the Act.
Trades, consulting, services: almost always 19 per cent
All classic services — consulting, programming, design, trades, repairs, cleaning, transport over 50 kilometres — fall under the standard rate. So do the hire of movable goods and most intermediary services. An exception applies to charitable bodies and to certain supplies within a special-purpose operation; here a careful check pays off.
What to do when you are unsure
Where there is doubt, the standard rate is the safer route, because an overstatement is owed under section 14c UStG but is at least not treated as a tax shortfall. An understatement, by contrast, leads to an additional assessment. For larger or recurring supplies a binding ruling from the tax office is the best protection — it costs a fee but creates legal certainty going forward.
Compare both variants
In practice it helps to see the same amount once at 19 and once at 7 per cent — especially when pricing for consumers. The VAT calculator puts both rates side by side in a table and shows how the gross price and your net revenue each change. If you happen to be reviewing your price floor anyway, the freelance rate calculator continues the exercise on the cost side.
This article gives an overview of the typical cases and is not tax advice. Classifying a particular supply depends on details that can only be assessed on the individual facts.