Starting on 1 December, hospitality services were re-categorised as services liable to the first reduced VAT rate, i.e. 15%; it means that this is the case of hospitality services connected with serving beverages (such as restaurants, catering and other services).
There is, however, one exception: the above rule does not apply for alcoholic beverages and tobacco products – these are still taxed by 21% VAT.
As the “hospitality services” include both provision of dishes and beverages, in order to determine the appropriate VAT rate it is necessary to distinguish the services directly connected with selling alcoholic drinks and tobacco products (subject to the basic VAT rate) from those connected with providing meals and non-alcoholic drinks (the first reduced rate).
For example, a lunch menu consisting of a dish and a pint of beer or glass of wine or another alcoholic drink will require to differentiate the two items in terms of the VAT rate.
