Other countries have introduced lower VAT rates on accommodation (some on restaurant meals, too) because they believe that tourism is a very price sensitive market and that lower VAT rates lead to higher consumer demand – and thus the creation of more jobs. EU rules allow member states to apply a reduced rate of VAT to hotel accommodation and restaurant meals.
As a result of the economic crisis, Germany decided to lower VAT on hotel accommodation from 19% to just 7%. One year on, the German Hotel and Restaurant Association says that hoteliers have used the tax relief to invest in acquisitions and renovations, as well as staff training, increased wages and lower prices. A survey of the association’s 5,000 member businesses pointed to the creation of 6,237 additional jobs and €858.8m of investment since the tax relief was introduced.
Hotel VAT and normal VAT in a selection of European countries
| Country | Hotel VAT | Normal VAT |
| Ireland | 9% | 21% |
| France | 5.5% | 19.6% |
| Spain | 8% | 18% |
| Portugal | 6% | 23% |
| Germany | 7% | 19% |
| Belgium | 6% | 21% |
| Netherlands | 6% | 19% |
| Denmark | 25% | 25% |
| Norway | 8% | 25% |
| Sweden | 12% | 25% |
| Finland | 9% | 23% |
| Poland | 8% | 23% |
| Czech Republic | 10% | 20% |
| Austria | 10% | 20% |
| Italy | 10% | 20% |
| Slovenia | 8.5% | 20% |
| Greece | 6.5% | 23% |
| Cyprus | 5% | 15% |
| Malta | 7% | 18% |
| Hungary | 18% | 25% |
| UK | 20% | 20% |
| Bulgaria | 9% | 20% |
A cut in UK hospitality VAT could help create 320,000 jobs in the post Olympic years and help save pubs, restaurants and hotels. Two Government e-petitions, created by the Morning Advertiser and Caterer & Hotelkeeper, are open until August 2012.
Click here to sign the Morning Advertiser petition.
Click here to sign the Caterer & Hotelkeeper petition
