German VAT Treatment of Hotel Ancillary Services subject to challenge before the CJEU

For years, Germany has required ancillary hotel services – such as breakfast, parking, and wellness facilities – to be taxed separately from the reduced-rate accommodation. This practice is now under review following a CJEU ruling (C-516/21) that questioned the mandatory splitting of what may be a single composite service. In response, Germany’s Federal Fiscal Court (BFH) referred three cases to the CJEU (C-409/24, C-410/24, C-411/24) in January 2024, seeking clarity on whether these ancillary services must be taxed separately. A ruling against the current practice could significantly simplify VAT compliance for the hospitality sector.

Key takeaway

Businesses in the hospitality sector should monitor this case closely and consider filing appeals to keep tax assessments open, preserving the opportunity to benefit from a favourable CJEU decision.