Holiday Rentals News - VAT cut in France to benefit diners

VAT cut in France to benefit diners

A VAT cut in France will benefit holidaymakers eating out in the country. Restaurants and cafes in France will be able to charge diners less once the VAT reduction comes into force.

From July 1, sales tax on restaurants and cafes in France will be cut from 19.6 per cent to 5.5 per cent, according to news agency Reuters. The moves means holidaymakers renting villas in France will see prices fall significantly when dining out. However, alcohol sales will not benefit from the lower rate so as not to encourage heavy drinking.

French politicians had been campaigning for seven years to reduce VAT in eating establishments, but the cut was only approved by the European Union (EU) earlier this year. Successive French governments argued that the current rate was too high in a country which prides itself on its culinary heritage.

Announcing the news, France's economy minister Christine Lagorde said: "The reduction in VAT is going to let France...conserve and improve its culinary reputation." The cost in lost revenue would be offset by the increase in restaurant business, Lagorde added.

Coinciding with the start of the peak summer holiday season in France, French restaurateurs are pleased with the timing of the VAT cut. "Our first cause for satisfaction is the start date. The season starts on July 1," said Didier Chenot, head of France's hotel, restaurant and cafe union. "Clients will now be able to enjoy a full meal with a 5.5 per cent VAT rate. That will be marked on the menus."

Concerns have been raised by the French media that establishments would not pass the tax cuts onto diners. However, the country's government is confident that competition from other eateries offering the reduction will persuade owners to comply.

This story was brought to you by holidaylettings.co.uk, the UK's No.1 for holiday homes worldwide.

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