Comments on ECJ C-146/22: Different for VAT rates for same product allowed by the Directive

YD, a chain of cafes in Poland, sells a hot chocolate drink made from milk and chocolate sauce called ‘Classic Hot Chocolate’.
The Polish tax authorities deemed the sale of this drink for take-away and on-premises consumption as a supply of goods combined with ancillary services, subject to a reduced VAT rate of 8%. YD objected, arguing for a reduced VAT rate of 5% for milk-based drinks.
The tax authorities rejected the objection, stating that a ready-to-use drink sold in a shop differs from a hot drink prepared to order and served in a cafe by an employee.
The ECJ ruled that national legislation allowing for two different reduced VAT rates for foodstuffs containing the same main ingredient and meeting the same needs of an average consumer, depending on whether they are sold at retail or prepared at the request of a customer and served hot for immediate consumption, is not precluded by Article 98 of the VAT Directive and the principle of fiscal neutrality, as long as the foodstuffs do not have similar properties and the differences between them, including associated ancillary services, significantly influence the decision of the average consumer to purchase one or the other food product.