I asked this question on Twitter and got a lot of guesses, so I’ll try it here for the blog crowd.
In February we’re about to start another coffee cup giveaway with our McMenüs (Value Meals). Even though the cup is free, we have to adjust our Value Added Tax (similar to sales tax) programming in the registers. Why do you think we have to pay VAT on an item that is free?
So you don’t get distracted… yes, Germany has different VAT rates for restaurant food eaten in or taken out. A porcelain cup is not food, so is taxed the same regardless. The answer has nothing to do with eat-in vs take-out.
Update: The answer is below in the comments, for everyone curious about German VAT regulations!
{ 4 comments… read them below or add one }
Because McDonalds didn’t donate enough to the FDP?
You do have me curious, though.
One person curious about German VAT regulations? That’s enough for me…
When we offer a combination of products for a single price, and those products have varying VAT rates, we have to calculate the VAT on each product separately. We can’t sneak 19% products into a Menü at 7%, that’s tax evasion. We can distribute the total price among the individual items as we like, but we have to assign a minimum price of at least the “production cost” to each item. In a Menü the food is usually 7% and the drink is 19%, so we tax the drink (at least) at the minimum price and the food at full price.
When we add a free non-food item to the combination, the price paid stays the same, but the additional item has a “production cost”. That increases the amount we have to tax at the higher rate, so the total VAT for the Menü increases when we add a free glass.
Clear as mud? I had to take a half-day course on VAT calculation to be able to program the prices in our cash registers!
BTW The FDP and CSU platforms included a VAT decrease for both hotels and restaurants. We’re disappointed they left restaurants out
and are demanding a refund on our donation.I was curious, but I hadn’t yet come up with a plausible explanation yet so I hadn’t posted.
@tqe The plausible explanation is “because it’s Germany”. No more need be said.