ZPP Newsletter
Warsaw, 26th June 2020
Appeal of the Union of Entrepreneurs and Employers to the government: cover the whole catering industry with a uniform 8% VAT rate
There can be no doubt that food catering industry is one of the sectors hit hardest by the coronavirus pandemic. The industry has basically been shut down as a result of the restrictions put in place to fight the virus. Some of the restaurants did not survive this difficult period, for others the fight is only just beginning – they are still on the market, but their turnover is much lower than a few months ago.
“The[se] companies were significantly helped by means of the financial shield offered by the Polish Development Fund Group, enabling them to survive the period when they were in fact not earning at all,” said Cezary Kaźmierczak, the president of the Union of Entrepreneurs and Employers. “The problems did not end when the restaurants opened though: their profitability is currently limited by both reduced demand and the need to incur costs to adapt to higher sanitary standards,” he adds.
The contribution of the food catering industry to Polish GDP is approx. PLN 37 billion, and the market is dominated by micro and small entrepreneurs. The industry employs nearly a million people, mainly youth. Over the last few years, we have noticed a clear upward trend in the restaurant market.
“Despite successive regulations reducing the profitability of the food catering business, restaurants were doing increasingly better,” said Zbigniew Kmieć, the Union of Entrepreneurs and Employers’ Chief Agriculture and Food Expert. “Poles were becoming more affluent and thus began to eat out more often, which had a direct impact on the development of this market,” he concluded.
Due to the repercussions of the coronavirus pandemic, there is a enormous risk of not only breaking this trend, but even of a collapsing of the catering market in Poland. Entrepreneurs from the industry are pessimistic about the prospects for the industry in the short term, stressing that they may be forced to make the most difficult decisions, including those about closing down for good.
Considering the difficult situation, a number of countries have decided to apply a uniform, low VAT rate for this sector. These countries include Germany, Greece and Bulgaria, while Romania is considering applying a 0% rate for the food catering industry.
“We should also make such a decision in Poland,” emphasises Cezary Kaźmierczak.
It is worth noting that, according to the new VAT matrix, catering services are, in principle, already subject to the 8% rate. Unfortunately, there are a number of exceptions to this rule.
“The regular, higher rate applies to, among others, serving non-alcoholic and alcoholic beverages or seafood dishes,” adds Jakub Bińkowski, director of the Law and Legislation Department of the Union of Entrepreneurs and Employers. “Due to the structure of the revenues of restaurants and similar businesses, but also the logic of the system, it would be reasonable to cover the entire sector with a uniform 8% rate without any exceptions.”
The experts of the Union of Entrepreneurs and Employers stress the unique nature of catering services and how labour intensive it is. Introducing a single, low VAT rate on everything in this industry would increase the profitability of restaurants. The additional profit would partially return to the State Treasury as part of the income tax, and it could also be used to repay subsidies granted by Polish Development Fund Group.
25.06.2020 Report by the Union of Entrepreneurs and Employers: Let’s save Polish restaurants
Fot. Tama66 / pixabay.com
