Why more German cities could start charging 'tourist tax'
German cities and districts are allowed to charge guests an 'overnight tax', according to a ruling by the country's highest court.
The local taxes - called Bettensteuern or bed taxes - are compatible with the Basic Law (Grundgesetz), the Federal Constitutional Court ruled on Tuesday.
It came following complaints about collecting the tax by a handful of hotel owners in Hamburg, Bremen, and Freiburg.
They complained to the highest court in Germany - the Federal Constitutional Court - that their basic rights were violated because they had to collect the tax from their own guests on behalf of the city or district authorities. And, because the tax can only be collected from leisure travellers - and not those on business trips - the hotel operators said this involved too much admin work.
READ ALSO: German hotels can advertise cheaper prices than Booking.com, court rules
However, the court rejected the complaints. They said the hotels were not disproportionately burdened by the requirement, and that it is a reasonable obligation.
Taxes on guests staying in overnight accommodation are also levied in around 30 other cities or districts across Germany, including Dortmund, Dresden, and Bonn.
Berlin, for instance, brought in 'hotel occupancy tax' in 2014. The name of the tax changes depending on the city. Cultural and tourism tax, as well as lodging, overnight, or city tax are common.
What exactly is the tax?
The 'bed tax' has been in place in Germany since 2005.
It's nicknamed that because visitors usually have to pay a certain percentage of the overnight price of accommodation per guest per night. This is normally around five percent, and it's added automatically onto the bill.
However, in some places a fixed amount has to be paid, like €3 per guest per night. But it can vary - in Hamburg, for example, the amount is staggered according to the price of the overnight stay. Simply, guests staying in more expensive accommodation pay more tax.
READ ALSO: How to save money on your taxes in Germany
Why was it brought in?
Hotels in Germany were relieved of paying some value added tax (VAT) several years ago. At the beginning of 2010, the tax rate dropped from 19 to 7 percent on hotels and overnight stays. So cash-strapped municipalities reacted by bringing in the overnight or 'bed taxes' taxes.
Due to a ruling from the Federal Administrative Court in 2012, "professionally compulsory" overnight stays are exempt from the tax everywhere. It meant that the rule only affected tourists.
What else did the ruling say?
The constitutional court judges said it is not practical for the states to collect the money directly from guests, so it should fall on the hotel operators to do it on their behalf.
They acknowledged that it means additional work for businesses, but said these are tasks which are part of being an entrepreneur - like having registration forms filled out or paying VAT.
What does this all mean?
It could mean that cities and districts that do not yet charge an overnight tax could think about introducing it now.
It's also interesting that the judges did not say anything about a distinction being made between business and private travellers. It could mean that all guests will have to pay the charge in the future - not just those travelling for leisure.
People travelling on business trips in Germany can claim the tax back if they are charged it.
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The local taxes - called Bettensteuern or bed taxes - are compatible with the Basic Law (Grundgesetz), the Federal Constitutional Court ruled on Tuesday.
It came following complaints about collecting the tax by a handful of hotel owners in Hamburg, Bremen, and Freiburg.
They complained to the highest court in Germany - the Federal Constitutional Court - that their basic rights were violated because they had to collect the tax from their own guests on behalf of the city or district authorities. And, because the tax can only be collected from leisure travellers - and not those on business trips - the hotel operators said this involved too much admin work.
READ ALSO: German hotels can advertise cheaper prices than Booking.com, court rules
However, the court rejected the complaints. They said the hotels were not disproportionately burdened by the requirement, and that it is a reasonable obligation.
Taxes on guests staying in overnight accommodation are also levied in around 30 other cities or districts across Germany, including Dortmund, Dresden, and Bonn.
Berlin, for instance, brought in 'hotel occupancy tax' in 2014. The name of the tax changes depending on the city. Cultural and tourism tax, as well as lodging, overnight, or city tax are common.
What exactly is the tax?
The 'bed tax' has been in place in Germany since 2005.
It's nicknamed that because visitors usually have to pay a certain percentage of the overnight price of accommodation per guest per night. This is normally around five percent, and it's added automatically onto the bill.
However, in some places a fixed amount has to be paid, like €3 per guest per night. But it can vary - in Hamburg, for example, the amount is staggered according to the price of the overnight stay. Simply, guests staying in more expensive accommodation pay more tax.
READ ALSO: How to save money on your taxes in Germany
Why was it brought in?
Hotels in Germany were relieved of paying some value added tax (VAT) several years ago. At the beginning of 2010, the tax rate dropped from 19 to 7 percent on hotels and overnight stays. So cash-strapped municipalities reacted by bringing in the overnight or 'bed taxes' taxes.
Due to a ruling from the Federal Administrative Court in 2012, "professionally compulsory" overnight stays are exempt from the tax everywhere. It meant that the rule only affected tourists.
What else did the ruling say?
The constitutional court judges said it is not practical for the states to collect the money directly from guests, so it should fall on the hotel operators to do it on their behalf.
They acknowledged that it means additional work for businesses, but said these are tasks which are part of being an entrepreneur - like having registration forms filled out or paying VAT.
What does this all mean?
It could mean that cities and districts that do not yet charge an overnight tax could think about introducing it now.
It's also interesting that the judges did not say anything about a distinction being made between business and private travellers. It could mean that all guests will have to pay the charge in the future - not just those travelling for leisure.
People travelling on business trips in Germany can claim the tax back if they are charged it.
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