Restaurants in 2026: VAT, Tips and Payroll Costs

Quick answer. In a French restaurant, three VAT rates coexist in 2026: 10% for immediate consumption (on-site and takeaway to be eaten straight away), 5.5% for food products meant for deferred consumption, and 20% for alcoholic drinks. Voluntary tips passed on to staff stay outside the scope of VAT.

VAT is the first source of error we see in restaurant files. A single menu mixes dishes served at the table, takeaway sales and drinks, each falling under a different rate. On top of that come two sensitive matters: how tips are treated and how heavily payroll costs weigh on the wage bill. Here is the 2026 briefing, written to help you decide correctly rather than face an adjustment.

In 2026, the restaurant sector does not have a single rate but a three-tier grid. The distinction rests on two combined criteria: the nature of the product and whether its consumption is immediate or deferred. These two questions, not the brand or format of the establishment, determine the rate.

The intermediate rate of 10% covers products meant for immediate consumption. It applies to food served on-site, but also to takeaway products to be eaten straight away: a sandwich, a salad or a hot dish sold to be eaten without delay fall under this rate.

The reduced rate of 5.5% applies to food products meant for deferred consumption. A packaged product, sold to be kept and eaten later, follows this logic. It is the storage, not the place of sale, that justifies the reduced rate.

The standard rate of 20% applies to alcoholic drinks, whatever the consumption mode. A glass of wine served at the table and a bottle sold to take away both stay at 20%.

This logic shapes the whole accounting of the sector, where a single order can add up several rates on one receipt.

The question of drinks comes up in almost every file, because the answer is not intuitive. The decisive criterion is whether alcohol is present.

Alcoholic drinks fall under the standard rate of 20%, with no exception linked to the consumption mode. This is the point to isolate clearly in your till, as it differs from the rate applied to dishes.

Non-alcoholic drinks follow the general logic of food products: the rate depends on whether consumption is immediate or deferred, under the same grid as the dishes. A drink served for immediate consumption is therefore not treated like a sealed bottle sold to take away for storage.

In practice, this requires careful till configuration: each drink reference must be linked to the correct rate from the moment it is entered, otherwise the VAT return repeats the error every month.

Voluntary tips have a special status. When a customer leaves an amount on top of the displayed price, and that amount is passed on to staff, it is not subject to VAT. Nor does it enter the restaurant owner's taxable turnover, because it does not pay for a service invoiced by the establishment.

The logic is simple: a voluntary tip is a customer's gift to the employee, possibly passing through the employer. It differs from a service included in the price, which does form part of turnover and follows the VAT regime of the corresponding service.

Regarding the taxation of the recipient, an exemption from income tax and social security contributions on tips has existed in recent years. It was introduced by the 2022 Finance Act and then renewed. Subject to its renewal for 2026, tips received by customer-facing staff could continue to benefit from this favourable regime. We recommend checking this point against the Finance Act in force before fixing the payroll treatment.

For collecting, splitting and tracing these amounts, payroll must document the flows: who receives what, how much, and under which distribution rule.

A restaurant owner whose turnover stays below the base VAT exemption threshold for services, set at 37,500 euros in 2026, is not liable for VAT. They then invoice without VAT and do not collect it, but cannot deduct it on their purchases either.

This regime mainly concerns very small structures: starting food trucks, seasonal or secondary activities. As soon as the business grows, crossing the threshold triggers liability and requires reviewing pricing and till configuration.

The trade-off is not neutral. The exemption simplifies management but removes VAT recovery on heavy investments, common in catering (kitchen equipment, fit-out). For a capital-intensive project, staying below the threshold is not always the most advantageous option.

VAT is only part of the picture. The restaurant owner bears costs that shape profitability and must be anticipated from the forecast stage.

1. Purchases of raw materials and drinks, the first cost item and the first margin lever.
2. The wage bill and social security contributions, particularly heavy in a labour-intensive sector.
3. Rent and premises charges, often high in dense urban areas.
4. Operating costs: energy, maintenance, insurance, royalties and till fees.

On the payroll side, restaurants use varied contracts (full-time, part-time, casual extras, apprentices) and a sector-specific collective agreement. Tracking hours, premiums and benefits in kind (meals) must be rigorous. The applicable rates are detailed in our 2026 social contribution rate grid, updated for early-year changes. The other January changes are summarised in our key measures for 1 January 2026.

The most frequent case we handle is the mixed restaurant: dining room, counter and takeaway. A neighbourhood establishment recently consulted us after configuring its entire menu at the single rate of 10%, for simplicity. As a result, alcoholic drinks had been collected at 10% instead of 20%, and some takeaway sales of packaged products did not benefit from the 5.5% rate. The correction covered several months of returns. The right reflex is to split references by rate from the moment products are created in the till, then check consistency at each monthly VAT close.

The second typical case concerns caterers and delivered food, where the line between immediate and deferred consumption requires a case-by-case analysis of the service actually sold.

• Mixing rates on a single receipt. An order can combine 5.5%, 10% and 20%. A badly configured till spreads the error across the whole period.
• Alcoholic drinks treated like dishes. The 20% rate is constant; forgetting it distorts collected VAT on every affected sale.
• Included service confused with a voluntary tip. Included service is in taxable turnover; a voluntary tip passed on is not. The two are not treated alike.
• Tip exemption assumed to be granted. Its continuation in 2026 depends on the Finance Act and must be checked before any payroll configuration.

In restaurant files, the gap in results between two comparable establishments rarely comes from the menu, but from the rigour of the back office: VAT rate allocation, food margin tracking and wage-bill control. Poorly allocated VAT does not only cost an adjustment; it hides the true margin and distorts every pricing decision.

Our view is that a restaurant owner has every interest in treating VAT as a management parameter, not a mere reporting obligation. A clean till configuration, checked monthly, turns a constraint into a reliable source of information on profitability by product family.

The underestimated risk lies in tips and service. Many establishments treat the two alike, which blurs both VAT and payroll. Clearly distinguishing the customer's gift, out of scope, from the included service, within turnover, avoids heavy corrections. We check this point systematically in bookkeeping engagements, in line with the applicable collective agreement.

Hayot Expertise tip. Before each return, check the rate allocation directly from your till software and reconcile it with the daily till summary. Document your tip distribution rule and trace its possible continuation against the Finance Act. When in doubt about a product or service, have the rate settled by your chartered accountant rather than applying a default rate.