Restaurant VAT Explained: Why Dine-In, Takeaway and Delivery Are Taxed Differently (2026)
The same tuna sandwich can carry 20% VAT, 5% VAT, or none at all. The bread doesn't change. The tuna doesn't change. Only where the guest eats it does.
Here's the short answer, and it explains almost every restaurant VAT question you'll ever have: VAT doesn't follow the food. It follows the supply. Eat in, and the guest is buying a service — a table, a plate, a waiter — and services get taxed at the higher rate almost everywhere. Take it away cold, and they're buying a product, which is often zero-rated or reduced. Take it away hot, and most countries drag it back up. Delivery normally keeps whatever rate the food already had, while the delivery app's fees are taxed separately at the standard rate.
And 2026 has been a big year for this. Germany cut VAT on restaurant food to 7% in January. Ireland dropped food service to 9% in July. The UK is running 5% VAT on children's meals until 1 September. If your prices haven't moved since last year, some of your margin has.
The One Rule: Are You Selling Food, or Selling a Service?
Every VAT system in Europe treats raw food kindly. Bread, milk, vegetables, a cold sandwich from a shop — these are usually zero-rated or on a low reduced rate. Governments don't like taxing groceries.
But the moment you add service around that food, it stops being groceries. It becomes catering. A table, cutlery, a chair, someone clearing the plate — that's a service, and services get taxed properly.
So the real question at your till isn't "what did they order?" It's "what did they buy?" A plate of pasta at table nine is a service. The same pasta in a cold box, handed over the counter, might be a product.
That single distinction is why your dine-in and takeaway VAT don't match. It isn't a loophole or an accident. It's the design.
Dine-In VAT: Eating In Is Always the Expensive Option
If a guest eats it on your premises, it's catering. Full stop. Hot, cold, a salad, a bag of crisps opened at the table — it all takes the catering rate. In the UK that's 20%. There's no cold-food escape hatch once the food is consumed in your seating area.
The word doing the heavy lifting is premises, and it's wider than owners expect. HMRC's VAT Notice 709/1 treats it as the area you occupy plus any area set aside for your customers to eat in. That includes:
- Shared tables and chairs in a shopping-centre food court — even though you don't own them
- Chairs and tables on the pavement or concourse next to your unit
- Your terrace, your courtyard, the two stools by the window
This is exactly why the cashier asks "eat in or takeaway?" It sounds like a packaging question. It's a tax question, and the answer changes what you owe.
Which brings up the honest bit nobody enjoys: if a guest says "takeaway", pays the takeaway price, then sits down at your table anyway, you've technically got a mismatch. Most tax authorities expect a reasonable, consistent system, not mind-reading. But if 90% of your "takeaway" cold sandwiches are eaten at your window bar, that's a pattern an inspector will notice.
Takeaway VAT: The Hot Food Test Decides Everything
Cold food to go is the cheap one. In the UK, cold takeaway food is zero-rated — 0% VAT. A cold sandwich, a salad box, a slice of cake in a bag: no VAT to the customer, none to hand over.
Hot food to go is standard-rated at 20%. And "hot" has a precise legal meaning. Under UK rules, food sold above room temperature is standard-rated if it meets any one of these five tests:
- It's been heated so it can be eaten hot
- It's been heated to order
- It's been kept hot after heating
- It's given to the customer in packaging that holds heat, or packaging designed for hot food
- It's advertised or marketed as hot
Read number five again. You can make food standard-rated with a chalkboard. Write "HOT SOUP" on the A-board, and you've marketed it as hot.
The classic edge case is the rotisserie chicken or the fresh bread that's hot only because it just came out of the oven and is now cooling down. If it wasn't heated so it could be eaten hot, and you're not keeping it hot or selling it as hot, it can be zero-rated. Toast a sandwich to order, though, and you've heated it to order — that's 20%.
What Stays Standard-Rated No Matter What
Some items never get the cold-takeaway break, in a shop or in your café:
- Confectionery — sweets, chocolate bars, most chocolate-covered biscuits
- Crisps and savoury snacks
- Ice cream and frozen desserts
- Soft drinks and bottled water
- All alcohol
So a cold cheese sandwich to go is 0%, and the can of cola beside it is 20%. Same bag, two rates. If your till rings both through one button, you're paying VAT you didn't owe — or owing VAT you didn't collect.
Delivery VAT: Two Separate Bills, Two Different Rates
This is where most owners slip, so let's untangle it.
The food keeps its own rate. Delivering food doesn't automatically make it catering. HMRC is clear that delivery on its own isn't the "significant element of service" that creates a catering supply. So cold food delivered stays zero-rated, and hot food delivered is 20% — because it's hot, not because it moved.
Your own delivery charge normally follows the food. When you deliver your own order, the delivery is usually treated as part of one supply, so it takes the same rate as what's in the bag. Hot pizza plus delivery: all 20%. The detail sits in VAT Notice 700/24, and contract wording can change the answer — worth ten minutes with your accountant if delivery is a big chunk of your sales.
Platform fees are always standard-rated. The commission Deliveroo, Uber Eats or Just Eat charges you is a service supplied to your business, taxed at 20%. That's separate from the VAT on the food. If you're VAT-registered you can normally reclaim that input VAT, but the rate on the food doesn't change just because an app was involved.
That last point matters more than it sounds. Platform commission already eats 15–30% of the order before VAT enters the room — we broke the full picture down in the real math of third-party delivery. Getting the VAT wrong on top of that turns a thin channel into a loss-making one.
Right Now: 5% VAT on Children's Meals in the UK Until 1 September 2026
Here's a live example of dine-in and takeaway being taxed differently — happening this summer.
From 25 June to 1 September 2026, the UK is applying a temporary 5% VAT rate to children's meals, as part of a wider summer package that also covers children's tickets to cinemas and family attractions. The details, from Revenue and Customs Brief 5 (2026):
- The rate is 5%, down from 20%
- It covers meals held out for sale only as a children's meal — a proper kids' menu, not an adult dish in a smaller portion
- Food includes drink within a qualifying children's meal
- It applies to consumption on the premises only — takeaway and delivery don't qualify
So the identical kids' meal is 5% at your table and 20% in a box. Same kitchen, same food, four times the tax. If you run a family restaurant and you haven't split those buttons on your till, you're overpaying right now — and the window closes on 1 September.
Restaurant VAT Around Europe (2026)
Rates move constantly, and three big ones moved this year. Here's roughly where things sit:
| Country | Food eaten in | Food taken away | Drinks |
|---|---|---|---|
| UK | 20% | 0% cold, 20% hot | 20% |
| Ireland | 9% (from 1 July 2026) | 9% hot takeaway | 23% |
| Germany | 7% (from 1 Jan 2026) | 7% | 19% |
| Netherlands | 9% | 9% | 21% on alcohol |
| France | 10% | 10% immediate, 5.5% packaged for later | 20% on alcohol |
| Spain | 10% | 10% | 10% when served |
| Italy | 10% | 10% | 10% when served |
| Poland | 8% | 8% | 23% |
Two changes worth knowing about in detail:
Germany cut VAT on restaurant food from 19% to 7% on 1 January 2026, permanently, under the 2025 Tax Amendment Act. It also killed the country's most famous VAT question. For years, "zum hier essen oder zum mitnehmen?" decided whether you paid 19% or 7%. Now food is 7% either way. Drinks stayed at 19%.
Ireland cut food service from 13.5% to 9% on 1 July 2026, and it's set to run to the end of 2030. It covers restaurants, catering and hot takeaway food, and the food side of hotels — but not hotel rooms. Drinks stay at 23%.
Rates and rules change fast, and the fine print differs by country. Treat this table as a map, not a legal answer, and confirm your own position with your national tax authority or an accountant who works with restaurants.
Drinks Are the Second Trap
Notice how often the drinks column doesn't match the food column. That's deliberate, and it's the quiet margin killer for cafés.
A Polish café sells cake at 8% and coffee at 23%. A German restaurant sells the schnitzel at 7% and the beer at 19%. A Dutch bar sells bitterballen at 9% and the pilsner at 21%.
If you're a coffee shop, drinks are your business — so the higher rate applies to most of what you sell, while your food carries the lower one. Blending them into a single average rate is the fastest way to get your VAT return wrong. Split them at the till and stop guessing.
Six Grey Areas That Cause Real VAT Bills
- The toasted sandwich. Cold on the shelf, zero-rated. Toasted because they asked, 20%. Same product, one button apart.
- The "hot" chalkboard. Marketing something as hot can standard-rate it, even if you never intended that.
- Shared food-court seating. You don't own the tables. They're still your premises for VAT.
- The catering job. Drop cold platters at an office and leave: often zero-rated. Stay to lay tables, serve and clear: that's catering, standard-rated.
- Service charge. A compulsory service charge takes the same rate as the meal. A genuinely voluntary tip is outside the scope of VAT. Only one of those is optional in the guest's eyes — worth reading alongside how to handle split bills, where this comes up constantly.
- The zero-rated turnover trap. In the UK, zero-rated sales still count toward the £90,000 registration threshold. A sandwich bar selling nothing but 0% cold food can still be legally required to register.
What This Means for Your Menu Prices
You've got two honest choices, and both are used by serious operators.
Same price everywhere. Charge £8.50 whether they eat in or take out. It's simple, guests never feel cheated, and it reads as fair. The cost: on a 20% dine-in versus 0% takeaway split, your real margin on that dine-in £8.50 is much thinner. You're absorbing the tax.
Different prices per channel. Charge less for takeaway, since you're not handing 20% to the government. Guests in the UK are used to this. It protects margin honestly — but only if your menu, your till and your online ordering all agree, or you'll be explaining the gap to an annoyed customer at the counter.
There's a third option that's really the second one in disguise: keep the same headline price and accept that takeaway is simply your better-margin channel. That's a legitimate strategy — just make it a decision, not an accident. If you're rethinking prices generally, the line where higher prices start hurting perceived value is worth reading before you move a single number.
One rule that isn't optional: prices shown to consumers must include VAT. Menu, website, delivery page, all of it.
Keeping Your Records Straight
The mechanics are simpler than the rules.
- Tag every product with a tax class — hot food, cold food, soft drinks, alcohol, confectionery. Do it once, properly.
- Make the channel a real field on the order, not a note. Dine-in, takeaway and delivery need to be separate on the receipt and in the report.
- Let the rate follow the channel automatically. Any decent till can scope a tax to one fulfilment type, so the same product charges 20% at the table and 0% in a bag with no staff decision involved.
- Keep the tax breakdown on the receipt, split by rate. Your accountant needs it, and an inspector will ask.
- Review after every rate change. Three countries moved this year. Whoever owns your menu should be checking each January and July.
The failure mode isn't dramatic. It's a business with one "Food" button and one flat rate, quietly wrong for eighteen months, discovered during an inspection with interest attached.
For US Readers: It's Sales Tax, Not VAT
The US doesn't use VAT. It uses state and local sales tax, and the logic runs differently — but the dine-in versus takeaway split shows up anyway.
Most states exempt grocery food while taxing "prepared food". Hot food, food sold with utensils, and food eaten on site usually land in the taxable bucket. Cold, unprepared items often don't. California even has an 80/80 rule: if more than 80% of your sales are food and more than 80% of your food sales are already taxable, your cold to-go food generally becomes taxable too, unless you account for it separately.
Different machinery, same instinct — governments tax the restaurant experience more heavily than the raw ingredients. Rates and definitions vary by state and city, so check your state's department of revenue rather than a national summary.
Frequently Asked Questions
Why is takeaway food cheaper than eating in? Because eating in is legally a service, not a food sale. Services carry the higher VAT rate. In the UK, dine-in food is 20% while cold takeaway food is 0%, so the same item genuinely costs the business different amounts.
Is there VAT on hot takeaway food? Yes. Hot takeaway food is standard-rated at 20% in the UK. It counts as hot if it was heated to be eaten hot, heated to order, kept hot, packed in heat-retaining packaging, or advertised as hot.
Is cold takeaway food VAT free? Cold takeaway food is zero-rated, which isn't quite the same as VAT free — you charge 0%, and it still counts toward your registration threshold. Confectionery, crisps, ice cream, soft drinks and alcohol stay at 20% even when cold.
Do I charge VAT on a delivery charge? Usually your own delivery charge takes the same rate as the food it's delivering. Hot food and its delivery: 20%. Cold food and its delivery: 0%. Third-party platform commission is always 20%, separately.
Does delivering food make it catering? No. HMRC says delivery on its own isn't the significant element of service that makes a supply catering. Hot delivered food is standard-rated because it's hot, not because it was delivered.
What VAT do I pay if a guest orders takeaway and then sits down? The rate follows the actual supply, so food eaten in your seating area is catering. Use a consistent, reasonable system for how you ask and record it, and keep it applied the same way for everyone.
What is the UK children's meal VAT rate in 2026? 5%, from 25 June to 1 September 2026, for meals sold only as children's meals and eaten on the premises. Takeaway and delivery don't qualify. It reverts to 20% after that.
What's the VAT on restaurant food in Germany now? 7% on food since 1 January 2026, permanently, and it applies the same way to dine-in, takeaway and delivery. Drinks remain at 19%.
Do tips have VAT on them? A genuinely voluntary tip is outside the scope of VAT. A compulsory service charge is part of the meal price and takes the same VAT rate as the food.
Do zero-rated sales count toward the VAT registration threshold? Yes. In the UK, standard-rated, reduced-rated and zero-rated sales all count toward the £90,000 threshold. A cold-food-only sandwich shop can still be required to register.
Here's the thing about restaurant VAT: it's not that complicated once you stop thinking about food and start thinking about supplies. Table service is a service. A cold box over the counter is a product. Hot food to go is the awkward middle that governments decided to tax like a service anyway.
Do three things this week. Check your menu prices actually reflect the rate you're paying on each channel. Split hot, cold and drinks into separate tax classes on your till. And if you're in the UK with a kids' menu, get that 5% rate set up before 1 September — it's real money, and it expires.
Then confirm the details with your accountant. Rates shifted in three countries this year alone, and the one thing worse than paying VAT is paying it twice.
