Doubts about the apportionment requirement for accommodation services

It is seriously doubtful whether the apportionment requirement for accommodation services is compatible with EU law.

The reduced VAT rate applies to the short-term letting of living rooms and bedrooms. However, services that do not directly serve the purpose of letting are exempt from this, even if these services are covered by the remuneration for letting. The Federal Fiscal Court had previously confirmed this splitting requirement in the hotel industry, but now has serious doubts about it under EU law.

The reason for this is a ruling by the European Court of Justice, which decided that a single supply consisting of a main and a secondary component, which would be subject to different VAT rates if supplied separately, is only taxable at the VAT rate applicable to the main supply, even if the price of each component included in the total price paid can be determined. The Federal Fiscal Court therefore granted the plaintiff hotel business a suspension of the enforcement of the VAT assessment. However, the European Court of Justice still has to have the last word on this issue.