The Court of Justice of the European Union ruled in joined cases C‑409/24, C‑410/24, and C‑411/24 that Germany's apportionment requirement for accommodation services complies with EU law, allowing the country to continue applying the standard 19% VAT rate to ancillary services like breakfast, parking, and wellness facilities while maintaining the reduced 7% rate for accommodation itself.
Background
The legal challenge arose following the CJEU's 2018 Stadion Amsterdam judgment (C-463/16), which ruled that a single supply cannot be divided between different VAT rates. This created uncertainty about Germany's Section 12(2) No. 11 of the VAT Act, which requires hotels to apportion services and apply standard VAT rates to ancillary services not directly related to accommodation, even when bundled with overnight stays.
The German Federal Fiscal Court (BFH) submitted three preliminary rulings after hotels argued they should apply the reduced accommodation rate uniformly to all bundled services, including parking, breakfast, fitness facilities, and Wi-Fi that could not be booked separately or deselected.
Decision
The CJEU found that Member States may isolate specific aspects within accommodation categories listed in Annex III of the VAT Directive when exercising discretion under Article 98. Germany's legislation establishes clear, objective criteria distinguishing between services directly related to short-term accommodation and those independent of accommodation.
The Court emphasized that the average consumer's perception of bundled services is irrelevant; the decisive factor is whether national selection criteria comply with EU requirements and maintain appropriate delineation. The CJEU left tax neutrality assessment to national courts, requiring examination of whether breakfast, parking, and wellness services are typically offered separately by other suppliers at standard VAT rates.
Context
This ruling resolves years of uncertainty for Germany's hospitality sector and confirms Member States' authority to selectively apply reduced VAT rates to specific accommodation aspects. Hotels must continue assessing which service components directly relate to accommodation and accurately determining consideration for separately taxable elements, even in flat-rate offerings. The decision prioritizes Member State discretion in VAT rate application over the general principle that ancillary services follow the main supply's treatment.
