The European Hospitality Industry Calls for Long-term Low VAT

Kate Nicholls
Kate Nicholls, CEO of the ALMR.

The ALMR and HOTREC, the umbrella association of hotels, restaurants and cafes in Europe, have together released a report that highlights the benefits of low VAT on job creation and competitiveness in the EU.

The report shows that lower VAT rates on hospitality services – which almost all Member States apply to accommodation and two-thirds to restaurant services – is key to Europe’s competitiveness as a tourism destination.

In light of the findings, the ALMR is calling upon the industry to take part in Tax Equality Day on Wednesday 20th September, which sees on-trade outlets cut the price of food and drink for one day only, to highlight the benefit of a tax reduction to the government.

The report showed that the share of international tourism arrivals to Europe dropped from 60% to 51% between 1990 and 2015. Europe ranks second, behind Asia and the Pacific region, in terms of international tourism receipts (336.6 billion EUR). However receipts are rising at a lower level (1.5% and 3.4% in 2012 and 2015 respectively), versus the rest of the world (4.3% and 4.4%).

The report states that low VAT in the long-term is key to reversing these negative trends, by sustaining and creating jobs in hospitality. The sector created 2.5 million new jobs in the last decade (a 29% growth versus 7.1% in the overall economy), as well as fostering investments to develop an even more qualitative and sustainable tourism offer.

Kate Nicholls, CEO of the ALMR said: “Our report provides powerful evidence in discussions around the effect of VAT on our industry, which already faces high taxes. Importantly, it demonstrates how low VAT will encourage growth in employment.

“As the only national trade body dedicated to representing the interests of licensed hospitality operators, we have long campaigned to reduce VAT for hospitality businesses in the UK. Hospitality is the third largest private sector employer the UK, with pubs and restaurants generating £60bn turnover, so we represent a vitally important industry.

“The forthcoming election will provide us with an opportunity to push the case further, supported by evidence in this report, and we strongly encourage our members to get behind Tax Equality Day which is another powerful way to demonstrate the impact of lower VAT.”

ALMR is confident that Brexit will create the environment in which the Government can and will reduce VAT. Across the country, candidates of all parties in the General Election are expressing support for the cut.

A European Tourism Stakeholder Alliance composed of CLIA-Europe, ECTAA, EFCO&HPA, ETC, ETOA, EUROGITES, IAAPA, IRU and NECSTouR has joined the ALMR and HOTREC’s call for the long-term application of low VAT rates for tourism services.