Hotel VAT: Applicable Regime and How to Recover It

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Key points on hotel VAT

  • Reduced VAT at 5.5%: Since July 1, 2009, the hotel, café, and restaurant sectors benefit from a reduced VAT rate of 5.5%, under specific conditions.

  • Exceptions to reduced VAT: Renting rooms without staff and selling alcoholic beverages remain subject to a 20% VAT rate.

  • Hotelier obligations: To benefit from the 5.5% VAT, hoteliers must either reduce prices by at least 11.8% on selected products or hire an additional employee.

  • VAT on drinks: All alcoholic beverages are taxed at the standard 20% rate, regardless of consumption method.

  • VAT on accommodation: VAT on hotel room charges is generally non-recoverable for company executives or employees, except in specific cases.

  • Complex rules: VAT recovery requires proper documentation and management of different VAT rates according to expense type.

Article updated on January 25, 2025
Author: Guillaume Delemarle, chartered accountant with over 9 years of experience, specialized in assisting SMEs and business founders.

Hotels before the 5.5% VAT

Before the reduced VAT was applied, only room rental benefited from a lower rate.
All additional services—breakfast, meals, banquets—were taxed at 19.6%, later increased to 20% in 2014.

For half-board or full-board packages, hoteliers had to apply VAT as follows:

  • 75% of the price at 5.5%,

  • 25% at 20%.

The switch to 5.5% VAT for hotels

Since July 1, 2009, most hotel revenue falls under the 5.5% hotel VAT rate.

Two services remain exceptions:

  • Room rental without staff: 20% VAT,

  • Alcohol sales: 20% VAT.

Obligations after applying 5.5% hotel VAT

Similar to restaurants and cafés, hotels with restaurants must take specific actions to benefit from the reduced VAT:

  • Reduce prices by at least 11.8% on 7 out of 10 offered products, or

  • Hire an additional employee.

These measures are mandatory for access to the favorable VAT regime.

Why choose hotel VAT?

Before this reform, only rooms benefited from reduced VAT, while ancillary services were taxed at 19.6% → 20%.
Services affected included:

  • Breakfast,

  • Restaurant meals,

  • Seminars,

  • Banquets,

  • Full-board or half-board packages.

Now, almost all hotel revenue falls under the 5.5% VAT, except:

  • Room rental without staff: 20%,

  • Alcohol sales: 20%.

Opting for hotel VAT is advantageous because VAT can be deducted on business purchases, following legal rules.

VAT rate for alcoholic beverages in hotels

VAT in hospitality varies according to product type:

  • 5.5%: products for deferred consumption.

  • 10%: products for immediate consumption, hotel accommodation, laundry, housekeeping, open-air hotels.

  • 20%: all alcoholic beverages, on-site, takeaway, or delivery.

Alcohol always remains at the standard rate.

Hotel VAT and restaurant services

In restaurants, VAT is 5.5% or 10%, depending on consumption type.

Applicable to:

  • Traditional restaurants,

  • Fast-food,

  • Brasseries,

  • Cafeterias,

  • Table-service caterers,

  • Bars and cafés,

  • Consumption areas near entertainment venues,

  • Street food vendors,

  • Food markets,

  • Supermarkets,

  • Vending machines,

  • Train and boat catering services,

  • Hotel half-board and full-board packages.

  • Immediate consumption: 10% VAT

  • Deferred consumption: 5.5% VAT

For beverages:

  • Non-alcoholic, storable containers: 5.5%,

  • Non-alcoholic, non-storable: 10%,

  • Alcoholic: 20%.

Caterers follow the same VAT rules as restaurants.

VAT on hotel room-related services

Services directly linked to hotel rooms are generally subject to 10% VAT, including:

  • Room price,

  • Housekeeping,

  • Laundry,

  • Other included room services.

Can VAT on hotel rooms be recovered?

Business travel expenses are strictly regulated. VAT recovery is possible only if:

  • The expense is for company operations, not personal use,

  • It relates to taxable VAT operations,

  • It is not excluded by the General Tax Code,

  • A valid receipt is provided.

Hotel room VAT for executives or employees is non-recoverable, regardless of professional justification, according to Article 206 of the French Tax Code.

However, if meals and breakfasts are invoiced separately, the corresponding VAT can be recovered under conditions.

Exceptions to non-recoverable hotel VAT

One exception exists for deductible VAT on lodging: staff accommodation in roles such as:

  • Security personnel,

  • Guards,

  • Surveillance on construction sites or company premises.

In these cases, VAT on hotel rooms can be deducted by the company.

Flat-rate allowances

The rules above apply only to actual expenses.
When expenses are reimbursed as flat-rate allowances, the tax authority’s official scales apply.

The Urssaf determines whether these allowances constitute a taxable benefit, especially if amounts exceed official limits.
Thresholds vary by location: Paris, metropolitan France, overseas.
Regularly updated Urssaf tables must be consulted.

VAT recovery in other countries

For French taxpayers:

  • France: hotel accommodation VAT for employees is 10%, generally non-recoverable.

  • Spain: full VAT recovery possible under conditions, if not established in Spain.

  • Switzerland: hotel nights subject to 3.7% VAT. Recovery requires a complete file: VAT declaration, bank details, French taxpayer registration proof, original invoices.

  • Germany: VAT at 7%. Requests are submitted online. Thresholds:

    • Minimum €50 per quarterly/annual request,

    • Maximum €400 for certain annual requests.
      The German tax office has four months to refund, given proper invoices including German VAT number and detailed amounts.

Managing hotel VAT: strict compliance required

Recovering VAT on hotel, restaurant, and ancillary expenses is complex.
Requirements:

  • Knowledge of applicable VAT rates,

  • Professional accounting software,

  • Preservation of original invoices.

These steps are essential to validate deductions during tax audits.

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