Cafe owners win VAT ruling in dispute over tax on beer

Belgium’s supreme administrative court has ruled in favour of cafe owners in a dispute over tax on beers they never sold.

The seemingly arcane question of how many glasses of beer can be pulled from a 50-litre keg is actually a multi-million euro question. The tax authorities’ answer is 192 glasses, whereas the cafe owners federation, FedCaf, puts it at 168.

The Council of State has now sided with the cafe owners. For those who are on a flat-rate VAT regime, this is a major game-changer since the difference means that they have each overpaid, on average, €13,000 to €17,000 per year in VAT - for a grand total of €76 million.

Mehdi Mhraka, the owner of three cafés in Leuven may serve glasses with speed and precision, but as he explains: "You can serve in the best possible way, but 192 glasses is not materially possible.

“When you pour a beer, there is always a little loss. This is called disgorgement.”

Mhraka is happy with the ruling, but added: “We’ll see what happens. I find it hard to see the State reimbursing us retroactively. But at the same time, it would be nice because we didn't sell those beers.”

“The Council of State will cancel the current flat-rate package,” said Olivier Bertain, lawyer for the FedCaf, “We will negotiate with the tax administrator to create a new flat-rate programme for 2020 and 2021 and require that they take into account the actual number of glasses poured.”