Estonia's foodservice sector edging toward crisis as VAT erodes profits
A commentator warns that Estonia's high VAT and collapsing profit margins are pushing restaurants to close, urging politicians to reconsider tax policy on dining out.
News outlet ERR has published a broad overview of Estonia's foodservice industry, noting that restaurant closures are reported almost monthly. Commentator Märt Meesak argues that costs consistently outpace revenue, and that Estonia has the second-highest VAT on food and dining in Europe after Denmark — roughly double the EU average.
He criticizes politicians who claim only the strongest businesses should survive or that eating out is a luxury, pointing out that tourism and foodservice are interconnected with many other sectors, including laundries, courier firms, security and cleaning companies, farmers and manufacturers.
Profits near zero
According to 2026 data from the Estonian Hotel and Restaurant Association, average profitability in the sector has fallen from four percent to about one percent. The industry's annual turnover is under one billion euros, having dropped 1.6 percent last year, with roughly 2,500 to 3,000 active establishments. At a one-percent margin, average annual profit amounts to just €3,000–€4,000, or about €300 a month — far below Estonia's average salary of over €2,000.
Meesak rejects the argument that a VAT cut would simply become extra profit for owners rather than reaching consumers, saying it would instead let businesses regain investment capacity and improve conditions for employees. He calls for supporting a sector he says is now kept alive only by devoted die-hards.
