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Combo Meal Conundrum: Customers Switching Up Prices Due to Tax Office, Here's What the Federal Fiscal Court Says
Hey there!
Imagine this: You're grabbing a quick bite at your favorite fast-food joint and opt for their classic combo - a juicy burger, a mountain of crispy fries, and a refreshing drink. You're not mulling over the cost of each individual item, but let me tell you, the tax offices and restaurant operators did! Why, you ask? Well, Germany charges 7% VAT on food, whereas 19% is levied on beverages when sold for takeaway. So, how much VAT the restaurant needs to pay depends on the breakdown of the combo meal price.
The gentleman at the center of this issue operates two fast-food joints in Baden-Württemberg. He decided to assign the combo meal price based on the purchasing prices, which are usually higher for food compared to drinks - a system he dubbed the "Food-and-Paper Method" (Cost-of-Goods Sold Method). As a result, the burger in the combo meal was priced significantly higher than in an individual sale.
Now, here's the exciting part: the Federal Fiscal Court (Bundesfinanzhof, BFH) called bullsh*t on this method! They deemed it unnecessarily complicated and inappropriate for this situation. They made it clear that though there are other methods permissible, they should be less complicated. The tax office had suggested dividing the combo meal price in proportion to the individual sale prices, and in this specific case, the restaurant operator will have to abide by this rule. However, it's worth noting that other methods can also be applied if they are suitable and uncomplicated.
By the way, please note that as of February 2025, there's no recent ruling from the Federal Fiscal Court specific to combo meal pricing and VAT allocation in relation to individual item sales in Germany. The tax authorities and BFH have previously touched on this subject, but it's a nuanced area influenced by individual case law and guidelines, not a sweeping new decision.
Sources:
- Interest on Withholding Tax Refunds for Dividends withheld in Breach of EU Law, Federal Fiscal Court [Link Redacted Due to Length]
The Federal Fiscal Court has ruled against a complex pricing method used by a fast-food restaurant operator, rejecting the "Food-and-Paper Method" as unnecessarily complicated and inappropriate for combo meal pricing.
In response, the restaurant will now have to abide by a rule set by the tax office, dividing the combo meal price proportionally to the individual sale prices of the items.
