Every price on your menu already includes VAT — but not every euro on that menu carries the same rate.
Ask an owner what their margin is and you get a hesitant answer. Ask them what VAT rate is on the glass of wine and the answer is instant: 23%. VAT is the number everyone in hospitality knows, and at the same time the number almost nobody can name in full — because there isn't one VAT rate on a restaurant bill, there are at least three.
That's not a knock on anyone's bookkeeping. A sit-down meal, the drink next to it, and the same dish handed over in a bag are, in most EU countries, three separate legal categories, each set independently, each changed independently in the last two years, and each easy to get wrong independently.
This article walks through the seven numbers that decide how much of a euro of revenue actually lands as yours: the rate on a sit-down meal, the rate on what's in the glass, the takeaway rate, the turnover threshold below which you don't have to charge VAT at all, how many times these numbers have moved recently, the VAT you can reclaim and usually forget, and the arithmetic that turns a menu price into what you actually keep.
It isn't tax advice — that's what an accountant is for, and the rules on registration, exemptions and filing are specific enough that one article covering 24 countries can't be a substitute. It IS the arithmetic mistake that shows up most often: dividing a menu price by the wrong number.
Why this exact number decides your bottom line
An EU menu is legally required to show the price VAT-inclusive. That means a €30 main course isn't €30 of revenue — a slice of it was already earmarked for the tax authority before you spent a cent of it. At Ireland's 9% catering rate, that's €2.48 on a €30 plate; at the 23% standard rate on the bottle of wine next to it, that's €5.20 on a €27.60 bottle.
The mistake that shows up most often is treating that gap as a percentage to subtract rather than a fraction to divide out: dividing cost by the menu price instead of by the ex-VAT revenue. At 21% VAT, a real 30% food cost quietly reads as a comfortable 24.8% — a nearly 5-point error on every line of a costing sheet, and the reason a menu that looks healthy on paper still runs tight in the bank account.
And the number itself doesn't sit still. Germany cut its restaurant food rate to 7% from 1 January 2026. Ireland cut its own catering rate from 13.5% to 9% from 1 July 2026 — a change recent enough that plenty of Irish owners are still pricing off the old figure. Lithuania raised its rate from 9% to 12% in the same window. What you learned when you opened is, in a third of the EU, already out of date.
Finance guide The complete finance guide for your restaurant From prime cost to cash flow: every number that keeps your business healthy, in one place. Read the guideThe 7 numbers
Seven numbers, in the order they actually appear on one real bill — from the plate to the return.
1. The rate on a sit-down meal
Ireland taxes a restaurant or catering service — food prepared and served — at 9%, instead of the 23% standard rate that applies to almost everything else. That reduced rate came into force on 1 July 2026, cut down from the 13.5% rate that had applied for years before it, and runs to 31 December 2030.
But "restaurant" doesn't mean the same percentage everywhere. Below is a comparison of three EU markets: the lowest catering rate in the Union, yours, and the highest — and the gap between those two extremes is wider than most owners assume.
A round, VAT-inclusive €100 bill — how much of it is VAT, and how much is left, in the lowest-rate EU market, yours, and the highest.
Figures are each market's reduced rate on a sit-down meal — not the standard rate, and not including alcohol.
2. The other rate in the glass
Alcoholic drinks almost never qualify for a reduced rate, and Ireland is no exception: alcohol, bottled water and soft/sports drinks stay at the full 23% standard rate, even when they're on the same bill as a 9% meal. One bill, two rates — 9% on the plate, 23% on the glass next to it.
That isn't an edge case. On a typical dinner ticket with wine attached, the REAL blended VAT rate on that one table sits noticeably above the 9% advertised on the menu — exactly the kind of arithmetic the calculator further down makes visible.
3. Eat-in versus takeaway
The same dish can carry a third rate the moment it leaves the building. In Ireland, hot takeaway food follows the same 9% rate as eat-in from 1 July 2026 — but COLD takeaway food (a sandwich, a salad) is zero-rated, 0%, a genuinely different category from a hot meal in a container.
That logic runs the opposite way elsewhere. Hungary taxes takeaway and delivery at the full 27% standard rate — the EU's highest — while the identical dish eaten on-site carries only 5%, because a takeaway sale is classified as a product sale rather than a service and loses every reduction the moment it's handed over in a bag. It's the single most counter-intuitive number in this whole comparison.
4. The turnover threshold below which you don't charge VAT at all
Below €42,500 in annual turnover from services (which is what a restaurant provides), a small business in Ireland can register for VAT relief and skip charging it altogether — at the cost of also losing the right to reclaim VAT on its own purchases. The threshold for businesses selling goods sits higher, at €85,000.
For most restaurants with staff and a real kitchen, that threshold is cleared within the first year — but for a starting food truck, a pop-up, or a very small café's first year of trading, this single number decides whether VAT applies at all. It's the first question an accountant asks, not the last.
5. How many times this number has moved recently
What you looked up when you opened is, across a striking share of the EU, already stale. Germany made its pandemic-era 7% catering rate permanent from 1 January 2026. Ireland cut its own from 13.5% to 9% from 1 July 2026. Lithuania just raised its from 9% to 12%, Finland trimmed its from 14% to 13.5%, and Greece went the other way entirely — its 13% reduced rate expired at the end of 2023 and restaurant meals there have sat back at the full 24% standard rate ever since.
At least eight of the 24 EU markets in this comparison changed their hospitality VAT rate between 2024 and 2026. A number you checked five years ago and never revisited again is a guess now, not a fact.
6. The VAT you can reclaim and usually forget
VAT runs in both directions. A VAT-registered business can offset the VAT it pays on its own investments — a new oven, a renovation, kitchen equipment — against the VAT it charges its own customers. That isn't a special exemption; it's the basic mechanism the whole system runs on.
Restaurants still miss it regularly: an invoice without a proper VAT number on it, a contractor paid informally who never issues a deductible invoice, or simply a shoebox of receipts that never reaches the accountant. Every missed invoice isn't just messy bookkeeping — it's VAT you already paid and will never see again.
7. The gap between the price on the menu and what you keep
This is where the previous six numbers meet: the menu price is always VAT-inclusive, so the revenue you actually book (ex-VAT) is that price divided by (1 + the rate) — never the price minus a percentage. On a bill mixing food at 9%, wine at 23% and a little takeaway at 9%, the blended VAT rate on your total revenue isn't any one of those three numbers — it's a weighted mix of all three.
A bistro's typical monthly revenue, split into food, alcohol and takeaway — each at its own rate.
Together that comes to a blended VAT rate of 10.1% across the whole revenue — not any one of the three separate rates, but a mix of all three.
The weighted average depends on how much of your revenue comes from each category — more wine on the list pulls it up, more takeaway pulls it down.
Run it on your own revenue
The seven numbers above are general — your own mix of food, drink and takeaway isn't. Fill in a typical month below and see instantly what share of your revenue is VAT, what you actually keep, and what it would cost you if everything were accidentally charged at the wrong rate.
The rates are pre-filled for Ireland's system above but are editable — useful if your own business sits in a different market, or if you simply want to see what a rate change would do to your own revenue.
The VAT calculator
Fill in your own revenue per category — the rates are pre-filled for Ireland, but editable.
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All amounts are VAT-inclusive, the way they'd appear on your till receipt. "Risk if miscategorised" shows what you'd owe if this whole revenue were accidentally charged at the standard rate.
The third tile — what it would cost if everything fell under the standard rate — isn't a theoretical number. It's exactly the amount at stake in a miscategorisation: a takeaway order accidentally booked as eat-in, or a soft drink counted in with alcohol.
Keep the blended rate somewhere you can find it again. It's the same figure your own accountant uses to check whether a VAT return matches what actually crossed the till.
Your VAT action plan
Three steps, from today through to your next return.
This week
- Check that your till books food, alcohol and takeaway separately at the correct rate — not all under one button.
- Look up your own country's most recent change; if you last checked more than two years ago, the odds are real that the number has since moved.
- Pull the invoices from your last major purchase (equipment, renovation) and confirm the VAT on them has actually been reclaimed.
This month
- Run the weighted average VAT rate for a real month with the calculator above, using your own figures instead of the example.
- Ask your accountant directly about the registration threshold and whether it's still relevant to your turnover.
- Decide who on your team is responsible for setting the correct rates in the till whenever one changes.
This year
- Put an annual check in the calendar: one fixed moment a year to re-verify your country's VAT rates specifically.
- Work out what a 1-point rate change would do to your annual revenue, so a news headline about it stops being a surprise.
- Keep this article or the numbers from it somewhere your team can find them — a kitchen hand setting up the till shouldn't have to guess.
The bottom line
VAT isn't a tax you simply "know" because it's printed on every receipt you hand over. It's seven separate numbers, each capable of changing independently, each capable of carrying its own mistake, and together they decide how much of a euro of revenue is really yours.
The good news: it's arithmetic, not guesswork. Once you know which rate belongs on which line of your bill, the rest is a matter of dividing correctly — price divided by (1 + rate), never price minus a percentage.
This article doesn't replace an accountant. What it does is hand you the questions worth asking one: what rate applies to my takeaway, where does my registration threshold sit, and when was this last actually checked?