Germany supports struggling restaurants by slashing their VAT

BERLIN (Reuters) - Germany's parliament voted on Thursday to slash value-added tax on restaurant meals by more than half for a year to help them recoup devastating losses caused by the lockdown and social distancing introduced to slow the spread of the coronavirus.

The hospitality trade has been among the worst-hit of all sectors of the economy by the restrictions that were imposed in March to help prevent the pandemic overwhelming Germany's healthcare system.

The measure, passed in parliament by a wide majority on Thursday, cuts the sales tax restaurant guests pay on food to 7% from 19%.

Restaurants have re-opened to eat-in guests, though rules requiring a minimum distance between tables continue to weigh on profits in the sector. Industry associations warn that swathes of businesses in the sector are on the brink of bankruptcy.

Finance Minister Olaf Scholz's Social Democrats have promised to further support the gastronomy sector in an impending economic stimulus package.

(Reporting by Christian Kraemer; Writing by Thomas Escritt; Editing by Michelle Martin)

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