VAT and business rates. To support businesses that were affected by forced closures and social distancing measures during the COVID-19 pandemic, the UK government allowed a temporary reduced VAT rate of 5% to be applied to certain supplies of food and non-alcoholic drinks, accommodation and admissions to attractions between July 2020 and September 2021. The duration of the guest’s stay does not affect the VAT treatment. 1.1 Who is a Guest? A guest is any person availing of an accommodation for leisure or business purposes. It is not limited to the provision of accommodation to tourists and holidaymakers. 2. What rate of VAT is applicable? Overview of the average rates and range for all tourism-related VAT rates in the EU. Luxembourg applies the lowest rate at 17%, while Hungary has the highest at 27%. There are 20 countries which apply rates within 2 percentage points of the average standard rate. International travel via air and sea is subjected to VAT relief in the EU. The current Value Added Tax (VAT) on hotels in the United Kingdom is set at a standard rate of 20%. This means that hotel businesses are required to charge their customers an additional 20% on top of their room rates and related services. VAT is a consumption tax imposed on goods and services, including accommodation provided by hotels. Hotels may say that these fees compensate them - as they may not be able to let the room at short notice – and so should be outside the scope of VAT. However this does not alter the VAT position gFj9XcN.

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