There is a call for value added tax as it applies to the hospitality sectors to be reduced throughout the EU. The CEHAT Spanish confederation of hotels and HOTREC, the umbrella association for hotels, bars, restaurants and similar establishments in Europe, believe that a cut in VAT would be an effective means for supporting recovery.
Both organisations have welcomed measures adopted by EU member states and other countries and which have provided emergency assistance to confront financial difficulties. Among these measures has been a reduction in so-called tourist or hospitality VAT rates. In Greece, for example, the hospitality rate was cut from 13% to five per cent at the start of July. The UK's hospitality rate is currently five per cent, having been reduced from 20%. In Turkey the rate for hotels, effective until the end of November, is just one per cent; it was eight per cent. Spain is one of the countries where there has been no reduction; it has stayed at 10%.
CEHAT and HOTREC argue that reduced VAT rates offer immediate benefits for businesses and for consumers and could make the difference between survival and closure over the coming months.
Member states in the EU apply their own decisions in setting rates, but EU law provides a framework for reduced rates under the 2006 value added tax directive. The two organisations are therefore urging the EU to reduce VAT for hospitality services to the lowest permitted under EU legislation - five per cent.
They feel that reduced rates for tourism-related businesses are one of the most effective measures for supporting employment, price stability, investment and economic resilience, while at the same time having comparatively limited impact on national finances.