Germany plans to cut hotel tax

Business travellers to Germany could breathe a sigh of relief if the government gets their own way.

The German government has announced plans to assist the struggling accommodation industry by reducing the rate of VAT on hotel rooms from 19 per cent to just 7 per cent from the 1st of January next year.

Like in other parts of Europe, German hoteliers are suffering during the economic downturn and have many empty rooms to fill.

In the first seven months of 2009, the average occupancy at German hotels was just 57.8 per cent, one of the lowest figures ever reported in Europe.

The government is hoping this move would both encourage more visitors and hopefully get them to stay longer, however the change still must be ratified by the Budestag, the lower house of parliament, and the Bundesrat, the representative of Germany’s 16 federal states.

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

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