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Germany VAT does not apply to subsidies to staff canteens

  • VAT
  • 10 May 2014 | Richard Asquith

Germany VAT does not apply to subsidies to staff canteens

The German Federal Court has overruled the German tax office on its interpretation of VAT treatment on subsidies to staff canteens.

The German VAT office treated subsidies by employers to the operators of their staff canteens as a VAT event. And that the canteen operator should levy German VAT at 19% on their invoices to the employers. In addition, the tax authorities ruled that the employers did not have the right to deduct the VAT charged since they were not the recipients of a the food service.

However, the Court disagreed and found that the subsidy is payment for the operation of the canteen, a valuable service to help attract and retain a good workforce for the employer. But the Court did uphold the non-deduction ruling.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.