Tourist Tax - Is there a VAT aspect?
VAT Treatment of Tourist Taxes levied by councils/governments
Here in the UK, both at a City as well at a government level, there are conversation around the creation of a Tourist Tax or levy being introduced. As ever on the VAT front we find there is the need to ensure that levies of this type are considered from the VAT perspective as to whether they are actually a charge for a supply or not. Readers may remember the Plastic Bag levy where all those 5p’s were seen as consideration for the supply of a plastic bag by the retailer and therefore subject to VAT. Could a Tourism Tax be seen as further consideration for an underlying supply to which they relate – hotel accommodation possible or another tourist attraction?
The UK is not alone in the need to think through the VAT aspects of these plans and a case from the summer, in Germany, has highlighted the way in which a “tourist tax” was regarded for income purposes. by a municipality who operated a spa facilities and saw the levy they collected as taxable income which justified their right to VAT recovery on their costs.
For readers, perhaps especially those in local authorities or government - Devolved or Westminster based - who are interested in the nuances of the case the report is here
Xeinadin's Indirect Tax team here at Centurion VAT are always available to help on situations where VAT gets complicated - do get in touch at our new email address IndirectTax@Xeinadin.com or call on 0330 124 7740.
This article is for information only and specific advice should always be sought.