The German Federal Constitutional Court recently ruled that hotels are obliged to collect Bettensteuern (bed taxes) on behalf of local authorities. This could lead to more municipalities charging “tourist taxes”.
In Germany, local taxes known as Bettensteuern, or bed taxes, have been in place since 2005. Visitors staying in cities with these taxes are obliged to pay if they are staying in paid accommodation overnight, which is usually a percentage of the overnight cost per guest. The percentage is typically 5 percent and is normally added automatically to the bill. In some places, a fixed rate is paid, for example, 3 euros per guest per night. In some cities, such as Hamburg, the tax is based on a sliding scale, so guests staying in more expensive accommodation pay more tax.
The tax is levied by German cities and municipalities due to the reduced VAT tax rate. Since 2010, hotel accommodation has been subject to the reduced tax rate of 7 percent, rather than the regular rate of 19 percent. In response, some municipalities and local authorities started introducing “overnight taxes”. The taxes are known by different names in different cities and districts, such as “tourist tax”, “lodging tax” or “city tax”. Berlin, for example, introduced its “hotel occupancy tax” in 2014.
The tax is only levied on tourists, as a ruling by the Federal Administrative Court in 2012 stipulated that all “professionally compulsory” overnight stays were exempt from the tax nationwide.
The Bettensteuern are collected by hotels on behalf of the municipalities. Recently, a number of hotel owners in Hamburg, Freiburg and Bremen complained to the Federal Constitutional Court that their basic rights were being infringed upon by being obligated to collect the taxes from their own guests. They also complained that collecting the taxes involved too much admin work, as the tax is only applied to leisure travellers, not people on business trips.
The court ruled that the Bettensteuern are compatible with Basic Law. It also stated that it was not practical for state authorities to collect the tax, meaning that hotel operators are obliged to collect it on their behalf. The court did acknowledge the extra work that this meant for hotels but likened this work to other obligatory tasks for entrepreneurs, like filling out registration forms or paying VAT.
It has been suggested that the court’s ruling could lead to more cities and districts in Germany charging overnight taxes to tourists. The court also made no distinction between people travelling for business or leisure, leading some to speculate that all overnight guests could be subject to the tax in the future.