Germany to cut hotel tax?

19 Nov 2009 by Mark Caswell

Business trips to Germany could soon become less expensive if the government gets its way.  It wants to help the beleaguered accommodation industry by cutting the rate of VAT on hotel rooms from 19 to just 7 per cent starting on January 1 next year.

Like their counterparts elsewhere in Europe, Germany’s hoteliers are suffering during the economic downturn and have many empty rooms to fill. In the first seven months of this year, the average occupancy at German hotels was just 57.8 per cent which is one of the lowest figures in Europe.

The government hopes this move will both encourage more visitors and hopefully get them to stay longer.

But don’t hold your breath. Although the government is behind the tax reduction, the change must be ratified both by the Bundestag (the lower house of parliament) and the Bundesrat (the representative of Germany’s 16 federal states).

Because the latter might have to pay for some of the tax shortfall it means, says a spokeswoman for the German Tourist Office in London, that “the tax reduction might or might not actually happen.”

If it does go ahead, Germany’s hotel tax cut will happen on the same day when the UK increases its VAT on hotel bills from 15 to 17.5 per cent.

Report by Alex McWhirter

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