In its ruling of 1 March 2016 (Az. XI-R-11/14), the BFH held that, for hotel accommodation, only those services of the hotelier that directly serve the letting (lodging) are subject to the reduced VAT rate of 7%. The provision of parking facilities to hotel guests is not among them. Such services must be taxed at the standard rate of 19%. According to the BFH, this applies even where no separate charge is levied.
Facts of the case
The claimant is a hotel operator with restaurants as well as wellness, beauty and fitness areas. The hotel had 140 parking spaces for cars and 10 spaces for trucks. These were available regardless of whether the guests stayed overnight at the hotel or only visited the restaurant or the other fitness areas. At full hotel occupancy, the parking facilities were sufficient for half of the hotel guests.
In principle, hotel guests were allowed to use any vacant parking space, although the claimant did not monitor this. Accordingly, no charges were invoiced for the use of parking spaces.
In its VAT returns, the claimant applied the reduced VAT rate of 7% to the accommodation. It only carved out the costs for breakfast and the use of the fitness and sauna facilities, which it subjected to the standard rate of 19%. No allocation was made for the use of parking spaces.
View of the tax office
The VAT special auditor took a different view and added an estimated notional charge of EUR 1.50 per hotel guest for the use of parking facilities. The objection was unsuccessful; the tax office adopted this view and amended the VAT assessment.
Fiscal court rules in favour of the claimant
The fiscal court, however, upheld the action and agreed with the claimant that, in the case at hand, making the parking spaces available was to be regarded as an ancillary service to the accommodation and that the reduced tax rate therefore also applied.
Federal Fiscal Court (BFH) sides with the tax office and overturns the fiscal court's decision
The BFH took a different view and agreed with the tax office: by making parking facilities available to hotel guests within the scope of availability, the claimant did not provide services subject to the reduced VAT rate of 7%.
Details of the BFH's reasoning can be found in the ruling of 1 March 2016, case reference XI-R-11/14.
Frequently asked questions
Frequently asked questions
Which VAT rate applies to parking facilities used by hotel guests?
Providing parking facilities to hotel guests is subject to the standard VAT rate of 19 %. It does not qualify as a service directly related to accommodation, which would be eligible for the reduced rate of 7 %. The BFH confirmed this in its ruling of 01.03.2016 (Az. XI-R-11/14).
Does the standard VAT rate apply to hotel parking spaces even without a separate charge?
Yes. According to the BFH, providing parking spaces is subject to 19% VAT even if no separate fee is charged to the guest. In this case, a calculated portion must be extracted from the overnight rate and taxed at the standard rate.
Which hotel services are subject to the reduced VAT rate of 7%?
The reduced rate of 7% applies exclusively to services directly related to the rental or accommodation provided by the hotelier. Ancillary services such as breakfast, use of fitness and sauna facilities, and the provision of parking spaces are not eligible and must be taxed at 19%.
How can the share of revenue attributable to parking spaces be determined?
If no separate fee is charged for the parking space, the relevant share must be estimated from the total price. In the decided case, the tax office applied a calculated value of €1.50 per hotel guest and subjected it to the standard VAT rate of 19%.
Is providing parking spaces to hotel guests an ancillary service to the accommodation?
No, the BFH rejected this classification. Although the tax court initially considered it an ancillary service to lodging, the BFH treats the provision of parking as a separate service subject to the standard 19% VAT rate. This applies in particular when the parking spaces are also available to non-overnight guests.