Tax alert 40 – Instructions for applying the reduced 5% VAT rate for supplies of restaurant / catering services

Instructions for the unitary application of the provisions of Article 291 para. (2) lit. e) and par. (3) lit. e) of Law no. 227/2015 regarding the Tax Code were published in Official Gazette no. 1037 on 6 December 2018

Please find summarized below the most important aspects:

  • A supply of food subject to the reduced 9% VAT rate is considered to take place when: a taxable person is limited to the supply of standardized food dishes at a location specified by the customer, without any additional service element, or when the supply of the food is the predominant element of an operation.
  • Items that normally accompany and are considered ancillary to a supply of food (and accordingly shall not be considered as a distinct supply of services for VAT purposes) are the following:
    • presentation of food on the shelf,
    • preparation of food,
    • transportation of food to the destination indicated by the  customer,
    • cooling or heating of food,
    • food packaging,
    • making available to the client of disposable cutlery, providing paper towels, mustard, ketchup, mayonnaise or the like,
    • provision of garbage boxes,
    • general presentation of the offer / menu.
  • The elements of service provision that may lead to an operation being classified as a restaurant or catering service for VAT purposes should normally be different from those mentioned above and include but are not limited to the following:
    • providing an adequate framework for food consumption,
    • food serving,
    • provision of catering staff, chefs or staff for cleaning,
    • making available kitchenware or cutlery,
    • making available furniture suitable for eating,
    • cleaning or disposing of tables,
    • individual advice on choosing food,
    • advising clients on the composition and amount of food for certain events.
  • The making available to clients of furniture in an area the general purpose of which is not to facilitate the consumption of food, does not constitute an element which could qualify the operation as a supply of restaurant services
  • The instructions also define what is meant by the reference to a provider’s space / location. The restaurant service provider is deemed to have the use of the space also if under the contract concluded with the owner of the space, the latter grants the right of access to a common space to several beneficiaries, obtaining in return the maintenance costs for the space.
  • Making available rudimentary furniture (a counter or bar tables) to customers that do not allow customers to sit down are not seen as ancillary to food supply and therefore do not determine the operation to be considered as a supply of restaurant services.
  • As regards the provision of both restaurant services and food package supply, the choice of the client at the time of the order is the one that determines the activity to fall into either one of the two categories mentioned above.
  • Several combinations of operations can be considered, depending on the wishes of the customers, in order to place an operation as a supply of catering services. These range from simple preparation and supply of dishes to full service, which also includes:
    • making available dishes, furniture (i.e. tables and chairs);
    • presentation of dishes, decorations;
    • making available of staff involved in serving and advising on the menu composition and choosing the beverages.

In addition to the above, the Instructions include aslo practical examples for the qualification of transactions as either supplies of goods or as supplies of restaurant and catering services.


Author: Silviu Savu – Manager, Indirect Tax


For additional information, please contact:

Alex Milcev, Partner – Head of Tax & Legal


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