Kept no-show fees: VAT due, back months, interest

A 60-cover restaurant in Germany that keeps a 25 EUR no-show fee is sitting on 1,790.20 EUR of VAT and interest: 1,766.36 EUR of tax across eighteen months already filed, plus 23.85 EUR of interest at 1.8% a year. The owner did nothing careless. They read the rate correctly and still got the answer wrong, because the rate was never the question.

The question is what your booking terms call the money. European VAT splits retained booking money along a line drawn by the Court of Justice, and the line runs through your cancellation clause, not your bank statement.

In Societe thermale d'Eugenie-les-Bains (C-277/05) the Court held that a deposit kept when a customer cancels a reserved booking is fixed compensation for the loss the cancellation caused. Compensation is not payment for a supply, so it falls outside the scope of VAT entirely. In Air France-KLM (C-250/14) the Court looked at money paid in advance for a service the customer then failed to use, and reached the opposite result: the payment was consideration for the right to receive the service, so it stayed taxable. Article 65 of the VAT Directive fixes the moment - where a payment is made on account before the supply, the tax becomes chargeable when the payment is received.

So two restaurants on the same street, charging the same 25 EUR, can owe completely different amounts, and a clause that says nothing at all reads as the taxable case, because a deposit against a future meal is exactly what a payment on account looks like.

2026 makes this worse in a specific way: the rate moved twice. Germany brought restaurant and catering services back to the reduced 7% rate on 1 January 2026. Ireland brought food and catering to 9% on 1 July 2026. A restaurant correcting eighteen months of kept fees is therefore correcting across a rate change, and any figure carried over from last year's spreadsheet is now wrong even if the treatment was right.

Then there is the arithmetic itself. A kept fee is a gross amount - the guest was charged 25 EUR, not 25 EUR plus tax. The VAT inside it is 25.00 x 7/107 = 1.64 EUR per cover, not 25.00 x 7% = 1.75 EUR. On 60 covers a month that difference alone is 6.60 EUR a month, and it compounds quietly through every correction you file.

No-Show Fee VAT Checker runs all of that in the browser. You pick the state - France 10%, Germany 7%, Ireland 9%, Italy 10%, Spain 10%, Netherlands 9% - choose which of three wordings your terms use, enter the fee, the covers you keep a month, the months you have already filed, and the annual late-payment interest your own authority charges. It returns the treatment with the case citation, the rate applied, the VAT inside the fees each month and year, the VAT across the back months, the interest, the total at stake, the days left before your next return, and one correction line: declare it, reclaim it, or rewrite the clause.

The direction matters as much as the amount. A restaurant whose terms already say compensation, but which has been putting VAT on those fees anyway, is not exposed - it is owed, and on the same numbers can reclaim 1,766.36 EUR.

All of the calculation is free, in the popup or on the web page, with no key and no limit. The full version at $60 takes the worked figures away as a .csv row per run for your bookkeeper and sets 30, 14 and 1-day reminders before the return date you entered. An Irish tax adviser bills EUR 100-180 an hour for advisory work and German time fees run EUR 45-260 an hour; this question rarely fits in one hour, because answering it means reading your terms, not looking up a rate.