On 5 March 2026, the Court of Justice ruled in Joined Cases C-409/24 to C-411/24 that a Member State may limit its reduced VAT rate for hotels to the accommodation itself, even where extras are included in one overall price.
The case
German hotel operators charged a flat-rate price that also covered extras such as breakfast and parking. One of them treated this as a single supply at the reduced rate of 7%. The German tax authority applied the standard rate of 19% to the extras. The German rules exclude supplies that are not directly used for the rental, even if they are covered by the same price.
The ruling
Ancillary supplies can normally follow the reduced rate of the principal supply. But a Member State that uses a reduced rate can also limit it to concrete and specific aspects of a category in Annex III to the VAT Directive. Two conditions apply:
- The national rules must identify the supplies on the basis of objective, clear and precise criteria.
- The principle of fiscal neutrality must be respected.
On neutrality, the German court must check whether the extras, seen on their own by an average consumer, are interchangeable with those of independent operators. If they are, taxing them at the standard rate does not infringe the principle, as long as those operators also pay the standard rate. The supplies at issue were breakfast and access to parking spaces, gyms, wellness facilities and wi-fi.
What to check
- Hotels and other short-stay businesses in Germany should split an all-in price between accommodation and extras.
- The ruling allows this approach. It does not require other Member States to follow it, so the national rule on your reduced rate is decisive.
- Check how your booking and invoicing systems allocate a package price.
mr. J. el Khalfioui LL.M.