This means that just about every country in Europe now has a significantly lower rate of VAT for hotel accommodation compared to other goods and services. The exceptions are the UK and Slovakia where VAT stands at 20% for all goods and services including hotel accommodation, and Denmark where the rate is even higher at 25%.
The British Hospitality Association is to start a lobbying campaign and is currently marshalling all the arguments in favour of reduced VAT on hotel accommodation in the UK.
“Our arguments are based on the fact that Britain’s high rate of VAT compared with other EU countries makes the UK very uncompetitive as a tourism destination. Secondly, tourism is the only export industry which is subject to domestic VAT,” said the BHA’s spokesperson.
“The problem lies in persuading the government that lowering VAT for accommodation will lead, ultimately, to greater revenues to the Treasury, stronger consumer demand and thus more jobs. France claims this is the result, and early signs in Germany are also positive,” he continued.
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.
| Country | Hotel VAT | Normal VAT | ||
| Austria | 10% | 20% | ||
| Belgium | 6% | 21% | ||
| Bulgaria | 9% | 20% | ||
| Cyprus | 5% | 15% | ||
| Czech Republic | 10% | 20% | ||
| Denmark | 25% | 25% | ||
| Finland | 9% | 23% | ||
| France | 5.50% | 19.60% | ||
| Germany | 7% | 19% | ||
| Greece | 6.50% | 23% | ||
| Hungary | 18% | 25% | ||
| Ireland | 9% (from 1 July 2011 ) | 21% | ||
| Italy | 10% | 20% | ||
| Malta | 7% | 18% | ||
| Netherlands | 6% | 19% | ||
| Norway | 8% | 25% | ||
| Poland | 8% | 23% | ||
| Portugal | 6% | 23% | ||
| Slovenia | 8.50% | 20% | ||
| Spain | 8% | 18% | ||
| Sweden | 12% | 25% | ||
| UK | 20% | 20% |
