Germany: Application of reduced VAT rate to short-term accommodations, but not ancillary services, allowed (CJEU judgment); other VAT developments
Ancillary services for short-term accommodation may be taxed at the standard VAT rate.
The Court of Justice of the European Union (CJEU) on March 5, 2026, held that EU law permits a member state to apply a reduced VAT rate to the core service of short-term accommodations, while applying the standard VAT rate to ancillary services (e.g., parking or breakfast).
The CJEU rejected the taxpayer’s argument that such differing treatment was contrary to the EU principle of a single supply. The CJEU clarified that under Article 98 of the VAT Directive, member states have the option to apply reduced tax rates to specific categories, such as short-term accommodations, and have the power to isolate and treat specific aspects of that category differently.
Read a March 2026 report prepared by the KPMG member firm in Germany.
Other recent VAT developments that may affect businesses in Germany include:
- Input tax deduction in the event of late receipt of an invoice for intra-Community acquisitions (CJEU judgment of March 12, 2026)
- No classification as a “voucher” in customer loyalty programs (CJEU judgment of March 5, 2026)
- VAT treatment of virtual currency in online games (CJEU judgment of March 5, 2026)
- VAT liability for telematics services provided by a commissioned association (GCEU judgment of February 25, 2026)
- Taxability of intra-Community acquisitions in the event of an erroneous tax statement (GCEU judgment of February 25, 2026)
- VAT and transfer companies (Federal Fiscal Court (BFH) decision of November 20, 2025)
- VAT treatment of membership fees for non-profit sports associations (BFH decision of November 13, 2025)
- Outsourcing of match operations by a sports club (BFH decision of November 6, 2025)
- Exercise of the right of input VAT deduction (BFH decision of February 26, 2026)