The definition of restaurant catering: food and non-alcoholic beverages prepared on the premises in restaurant catering (from TESZOR’15 56.10)

It is often not easy to decide when catering can be considered as restaurant catering, and thus when the reduced tax rate of 5% applies, and when catering is considered as a supply of goods, with a correspondingly higher VAT rate of 27%.

Article 6 of the current EU VAT Directive 2006/112/EC (the VAT Directive) Implementing Regulation (Regulation (EU) No 282/2011) details what constitutes restaurant and catering services, which say the following:

“restaurant and catering services” means services consisting of the sale of ready-made or semi-prepared food and/or beverages for human consumption, accompanied by appropriate ancillary services to enable immediate consumption. The sale of food and/or beverages is only one component of the fulfillment in which the services predominate. Restaurant services means the provision of the services on the premises of the service provider and catering services means the provision of those services outside the premises of the service provider.

(2) The supply of ready-prepared or semi-prepared food and/or drink, whether or not including transport, which is not accompanied by any other ancillary service shall not be regarded as a restaurant or catering service within the meaning of paragraph (1).”

On the basis of the above, the tax authorities distinguishes the sale of food as a product from catering services in the following way: a transaction is not a service if the food or drink is consumed on the premises, but if the sale of the prepared food or drink is accompanied by appropriate additional services enabling immediate consumption, which are the predominant service elements in the transaction.

“Therefore, takeaway, home deliveries and sales in circumstances where no more than a counter or ‘circulating board’ is provided for consumption on the premises are not considered to be the supply of a catering service. On the other hand, if the conditions for consumption on the premises are adequate, for example, there is a table, seating, cutlery, napkins, a bin, the table is cleared and the place is cleaned – whether by the seller of the food and drink or, for example, by the operator of a shopping centre – then the service is provided (serving is not a condition)” (Tax Authority official opinion).

On the basis of the above, services might be provided, for example, in a “food court” in a restaurant area of a shopping centre, for on-site consumption, even if the tables, chairs, use of the restroom or cleaning of the restroom are not directly provided by the seller of the food or drink.

In determining whether a take-away sale of a catering establishment falling within the appropriate classification is a sale of goods or the provision of a service, the intention of the customer to take away food or consume it on the premises is the determining factor. If a customer requests a take-away cake from a restaurant or confectionery, then picks it up wrapped and changes his mind and consumes it on the spot, this is still a supply of goods according to the original intention.

All in all, it can be seen that the application of a reduced tax rate for on-site consumption cannot be ruled out for services of a lower standard than restaurant catering, as confirmed by the Hungarian case law in its judgment of the Curia no Kfv.I.35.181/2022/8 and the Polish judgment of the EU Court of Justice in Case C-703/19.