VAT is one of the recurring costs everyone encounters when dining out or buying food. While some food items are classified as essential and receive favorable tax treatment, others are not—creating confusion and controversy. This article provides clarity for both business owners and consumers in the food and hospitality sectors.

🍽️ How VAT Works in Restaurants and Hospitality

In most restaurants, a reduced VAT rate of 10% is applied. This includes not only meals but also certain essential food items. However, some hospitality services may still be subject to the general VAT rate of 21%.

VAT Rates in Spain:

• 21% – General rate (applies to most goods and services)

• 10% – Reduced rate (restaurants, healthcare items, and some services)

• 4% – Super-reduced rate (essential food like bread, milk, eggs)

 

⚠️ Mixed Hospitality Services and Their VAT Rates

The VAT rate can vary when hospitality is combined with entertainment or other services. In these cases, the main purpose of the service determines the applicable VAT rate:

• Wedding Venues: 10% – dining is the main activity

• Kids’ Party Restaurants: 21% – focus is on entertainment

• Karaoke Bars: 21% – main offering is recreational

• Comedy Bars: 21% on show nights, 10% otherwise

• Casino Restaurants: 10% – food service is the priority

 

💡 Can VAT Be Deducted for Restaurant Meals?

Yes—but only in a business context. Meals related to client meetings, promotional activities, or services rendered can have VAT deducted. A full invoice is necessary as proof.

Examples of deductible expenses:

• Client hospitality

• Marketing events

• Supplier meetings

       Note: Personal or family meals are not deductible.

 

🧾 VAT on Menus: Is It Included?

Yes. By law, restaurants must display prices inclusive of VAT. If prices are shown without VAT, this must be clearly indicated.

 

🛒 VAT on Food Products in Supermarkets

Food items are taxed differently depending on their classification:

• 21% VAT: Alcoholic drinks, some processed items

• 10% VAT: Fresh meats, fish, canned foods

• 4% VAT: Milk, bread, eggs, fruits, vegetables

However, VAT on grocery food purchases is not deductible, even for business owners, as outlined in Article 96 of the VAT Law.

 

Conclusion

Navigating VAT in food and hospitality doesn’t have to be confusing. Whether you're dining out or buying groceries, understanding which rate applies can help you manage costs and stay compliant with tax laws.