Sales Tax to Go

Tax law can sometimes be quite curious. The sales tax on prepared coffee drinks for takeout actually depends on how much milk they contain.

A snack bar operator wanted to apply the reduced sales tax rate to his sales of coffee drinks. The tax office denied his request. The case went all the way to the Federal Fiscal Court.

The sale of food items listed in the annex to the Value-Added Tax Act (UStG) is subject only to the reduced sales tax rate of currently 7%. However, if the service aspect predominates, as is the case with restaurants, the full rate of 19% applies. If they are taken to go, they are subject to the reduced tax rate only if they are items listed in the annex to the UStG, such as food or milk beverages; everything else is not.

Although coffee and tea are also included in the aforementioned appendix, the highest tax court holds that this does not apply to their preparation. The Frankfurt Regional Tax Office, however, felt compelled to comment on the BFH’s decision. It shares the BFH’s opinion but applies the reduced sales tax rate in the case of latte macchiato, since the milk content here clearly amounts to at least 75% and it therefore still qualifies as a preferentially taxed milk-based beverage.

Outlook: Unfortunately, the question of whether the tax assessment for an espresso macchiato depends on the mixing ratio has not yet been resolved by the highest court.