Terrace tax hike will ruin Amsterdam businesses, catering industry says

Amsterdam’s “sudden” increase in terrace tax is unreasonable and risks ruining the local catering industry, sector organization Horeca Nederland told Parool. Restaurants, cafes, and pubs are already struggling with higher costs and can’t absorb this increased tax, the organization said. It will only result in even more expensive beer, fewer terraces, and possibly collapsing cafes and restaurants.

Amsterdam announced its gradual terrace tax increase in 2019. According to the city, the old rates no longer reflected the commercial value of the municipal land used when restaurants and cafes put their tables outside. During the coronavirus pandemic, the city exempted businesses from this tax, so the increase went unnoticed. But that made the 2023 and 2024 increases feel even harsher. Due to the increase, the city will earn 5 million euros per year from this tax, up from 2 million euros.

One entrepreneur in Utrechtsebuurt couldn’t believe his municipal tax letter stating he owed 48,500 euros in terrace tax, up from 13,000 euros per year before the pandemic. “In two years I will have to pay 100,000 euros in taxes. I need a turnover of at least 600,000 euros for that, but I won’t achieve that. I don’t have that money. And this is not the only thing that’s rising. Everything has become more expensive: staff, beer, raw materials, energy.”

“We make a loss in the winter,” the entrepreneur, who asked not to be named, told Parool. We make up for that with the terrace from April. But not with these kinds of amounts. I will not compensate for this. I can’t charge 4.5 euros for a beer, then no one will set a year.”

“An absurd increase,” chairman Pim Evers of the Amsterdam department of Horeca Nederland said. “This has not been communicated about, or at least not properly communicated.” He called it improper management.

“Exemption for three years and increasing the rates during that period to such an extent that many entrepreneurs now have to pay double or more is unreasonable, to say the least,” Evers told Parool. “Entrepreneurs feel misled and disadvantaged. For many, these taxes cannot be coughed up. It would have been more reasonable to adopt the old rate for the first tax after corona and then gradually implement the increase in subsequent years.”

Finance alderman Hester van Buren can imagine that entrepreneurs were “shocked” by their first tax assessment after three years. “They have had a difficult coronavirus time and a lot on their minds. But we announced that this tax was coming. Before and certainly after corona, on the municipal website and in the newsletter, among others,” she said. “The fact that the bill is now higher, regardless of the rate increase, may also be because we adjusted the rate areas. Winter terraces have also been subject to the levy since 2020. That wasn’t the case initially. And it may be that a terrace has changed in recent years, for example, enlarged or changed from uncovered to covered. Then different rates apply.”

Horeca Nederland called on terrace owners to flood the municipality with complaints. Alderman Van Buren said: “If entrepreneurs really feel that they have received an unreasonable assessment, they can report to us or object. We will look at that carefully.”