You put €4 on the counter and get a cappuccino in return. To take away. However, it is not €4 that is used to cover the costs of purchases, staff, rent, etc. and generate profits. First of all, the state gets something: sales tax. But how much exactly? Well – it depends. You can choose between 19% or 7%. Why is that? Theoretically because:
“The German VAT Act currently provides for two tax rates, namely a standard tax rate of 19% and a reduced tax rate of 7%. The reduced rate applies to numerous social, health, cultural, environmental and economic policy purposes. “
In practice, this is a complicated matter. Whether 7% or 19% VAT makes a big difference. 12% to be precise. On turnover, not profit.
A cappuccino with cow’s milk is taxed at 7%. With oat milk it is 19%. This means that if you buy a cow’s milk cappuccino for €4, €0.28 goes to the state. For an oat cappuccino, €0.76 goes to the state. That’s €0.48 less profit per oat cappuccino. A question of to have or not to have. That adds up.
Our turnover in April 2021:
Cappuccino with cow’s milk: €17,320, VAT: €1,212
Cappuccino with oat milk: €6,424, VAT: €1,220
Total: €23,744, VAT: €2,432
If we had only used oat milk, it would have been €4,511 VAT, i.e. €2,079 more.
The obvious thing to do would be to stop using oat milk. But we like to be silly and ask every customer: Cow or oat? Because it’s important to us.
Why the difference?
The German Value Added Tax Act, especially Section 12 and Annex 2, is full of absurdities. For example:
A donkey: 19%
A mule: 7%
Crabs: 7%
Lobsters: 19%
Potatoes: 7%
Sweet potatoes: 19%
This shows how arbitrary the taxation is. In 2009, a reform was discussed that proposed a simplification: food 7%, everything else 19%. But the lobbying was successful and the status quo was maintained.
To accept or not to accept?
We do not silently accept unequal treatment. There have been numerous petitions for equal treatment of cow’s milk and plant-based alternatives – all unsuccessful. The arguments for rejection were often bizarre and contradictory.
A petition from 2010 was rejected on the grounds that it was not the task of VAT law to promote a particular diet. But is it the task of VAT law to discriminate against crayfish over crabs or plant milk over cow’s milk?
To rebel or not to rebel?
And what do we do? Another petition? Nope.
Theoretically, we could file a complaint with the Federal Constitutional Court, but that would take years and cost a lot. Instead, we raise awareness of the issue.
What now? Seven or nineteen?
What do we demand? Are we demanding 7% VAT on oats?
No. We are calling for equal VAT treatment of plant and animal products. We are against meat and milk being taxed less than tofu and oat milk. Because we want consumers to have a real choice. And they don’t have that if, for example, vegan products are artificially made more expensive. It’s probably no coincidence that oat milk tends to be drunk by wealthy people. You just have to be able to afford the 19%.
Sure: For our company SUEDHANG, the variant “mixed milk drinks made from cow’s milk and oat milk always 7%” would be ideal.
On the other hand: I also have nothing against the following idea: Everything 19%. Oats like cow. A flat rate per head to compensate. Customers will understand the upcoming price increases here and elsewhere.
If I had to bet, I would bet: Equal treatment for VAT purposes will come. The only question is when.
