France Lowers TVA Sales Tax on Restaurant Meals to 5.5%

Starting this month, diners in Paris and, more generally, in continental France, will see the sales tax (TVA) on their meals lowered from 19.6% to 5.5%. This Brussels-endorsed measure is supposed to stave off restaurant closings in France which have been become rampant in recent years, and create new employment in the industry. And, obviously, make dining more affordable to both French citizens and tourists.

But things are never quite simple in France: the discount rate doesn't apply to everything and the restaurants are not obligated to lower the final price on every single item on the menu. Read on for details and examples...

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Photo: Alexander Steffler First things first: alcohol is not covered by this measure, so don't look for discounts there. Now, as far as food is concerned: because prices on meals in France are tax- and service-inclusive, generally speaking, the restaurants are expected to lower their total prices (hopefully generating more business for themselves). But not on everything.

For menu items, the contract between the government and the various restaurant associations ("Contrat d’Avenir de la restauration" or the "contract of the future of the restaurant industry") requires the savings of 11.8% (see note for calculation) to be passed through to the customer on at least seven of the following ten menu items: appetizer, hot dish (meat or fish), daily special, dessert, combo "appetizer + dish", combo "dish + dessert", juice or soda, mineral water, coffee, tea. Presumably, the tax decrease on other items, if the restaurant will choose not to pass on the savings, will simply help the owners' bottom line and thus have a positive effect on the employment in the industry.

But let's not dwell on the political reasoning. To give you a rough idea of what it would mean to you, the tourist, in practical terms, a 20-euro "combo" meal with the savings passed through will become a 18.60-euro meal.

Some of the famous Parisian restaurants announced their reductions immediately. Here are a few examples:

La Tour d'Argent

• Lunch menu: price lowered from 75 to 65 euros.
• Discovery menu: price lowered from 180 to 160 euros.
• Coffee: price lowered from 7 euros to 6 euros.

Alain Ducasse-owned restaurants (Aux Lyonnais, etc)

Discounts on new "TVA" menus vary from 8 to 13%. The meaning of TVA is cheekily decoded as "Tout Va Arriver" (everything will come).

Jardin des Sens
(www.jardindessens.com)

The menus are repriced as follows:

• Lunch menu: new price: 45 euros (a glass of wine included)
• Menu "Sens & Saveurs": new price: 125 euros (wine not included)
• Menu "Sens & Découverte": new price: 170 euros (wine not included)

You get the idea.

Bon appetit!

NOTE: The calculation is somewhat obscure, but we seem to have figured it out. So, the tax is lowered from 19.6% to 5.5% which represents 14.1%, right? Yes, but that's off the tax-exclusive, "original" price, which people don't even see. To obtain the final discount off of the published tax-inclusive price, one needs to perform the following math acrobatics:

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