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What is the fiscal burden on hotels from one country to the next?

One of the lessons of this analysis will undoubtedly surprise a good number of observers from other industries: in fact, with respect to other Western European countries, the United Kingdom is the one with the highest taxes on its hotels. Shocking, in a country where the government encourages lowering public spending and moderate taxation on corporations… this is the direct result of a VAT on hotels (20%) that is much higher than in other European countries, but also fairly high real estate taxes, that make up for the lack of a sojourn tax. However, it should be remembered that the tax burden on households (which is quite moderate) is not included in this comparison that bears only on hotels.It may also be observed that obligatory employer contributions are often very high for European hotels: it is a result of the weight of the workforce in a hotel’s operating costs. These contributions represent a particularly high pre-authorized debit item in Italy, Belgium and France. Inversely, in Luxemburg the low VAT (3%) and employer contributions (on average 2.4 times lower than in France) make up for a very high sojourn tax (more than 12€). The Netherlands stands out for its moderate tax burden nearly across the board.This analysis also shows that taxation systems are very different in Europe. One of the dangerous consequences is that there are almost always one or several countries with a higher tax for one item or another, which leads the tax authorities in other countries to suggest “aligning” tax rates as they see fit. Such logic directly opposes the reality of the fiscal burden that must be analyzed globally and in light of the profitability of a hotel business. Countries such as the United Kingdom, France, Italy and Belgium have global taxation close to 25€ for every 100€ paid by guest, while Germany and the Netherlands are below 20€ and Spain is at 23.1€. With an increase by “just” 2€ a night, France could soon become the European tax champion, with a decisive break away from the other European countries, and Germany and Spain in particular. The challenge is all the more delicate because it is the country where the net result is the weakest: 5.1€ for an initial turnover of 100€, ahead of the United Kingdom (7.7). Inversely, this net result is 9.6€ in Italy (despite high fiscal pressure) and 10.3 in Germany, a country that is currently the European leader in terms of hotels profitability.In this context, one may understand the recent concerns of British and French hoteliers whose city and central governments respectively wished to create and increase sojourn taxes …*In order for the comparison to be made with a comparable perimeter, the sojourn taxes under consideration are those practiced on the country’s referenced hotel market (London, Paris, Berlin, Barcelona, Rome, Amsterdam, Brussels…), the sojourn taxes collected per night were adjusted to an amount per room sold. In the current French context where the creation of an additional sojourn tax by 2015 of 2€ per night in the Paris region is under discussion, France is represented before and after this possible change in regulations, in case this tax will be absorbed by properties through their margins. The profit ratios before taxes and amortization by turnover (EBITDA / CA) used in calculations are those published by Eurostat for the hotel industry in different European countries.


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