ETOA’s 2019 review of European tourism taxes calls for destinations to recognise the value of the visitor economy and risk to competitiveness

Following the recent statement from the Scottish Government to introduce a bill to allow local councils the discretion to charge the UK’s first tourism tax, ETOA has announced the completion of its 2019 review of European tourism taxes in over 125 destinations in 26 European countries.

ETOA’s 2019 review of tourism taxes in Europe provides its 1300 members – tourist boards and travel companies who sell and supply tourism products to or within Europe – with the most comprehensive report of where tourism taxes are implemented; how much they are; what authorities are doing with the funds and where destinations are planning to introduce new levies. All of which enables ETOA members to budget more accurately and save time on research and product development.

Spanning countries from within and outside the European Union – from Albania to Ukraine – ETOA’s report reveals that since their last review, tourism taxes within Europe are growing. Tourism taxes are far from new, but ETOA estimates that today there are thousands of destinations levying taxes to visitors across Europe.

Currently there are 9 out of 28 EU member states – many of them in Northern Europe – who are not charging tourism taxes. These are: Cyprus, Denmark, Estonia, Finland, Ireland, Latvia, Luxembourg, Sweden and the United Kingdom.

But the top three visited countries in Europe: France, Spain and Italy have all introduced a range of charges.

The Taxe de Séjour in France is an overnight accommodation tax levied to visitors per person per night.

Spain has taxes in Catalonia and the Balearic Islands. In Barcelona, levies have also been extended to a day tax for cruise passengers and in the Balearic Islands the Government has repositioned the charge as an eco-tax, with funds clearly ring-fenced for sustainable tourism projects. At the time of writing, a number of other Spanish cities are also considering overnight charges.

Italy started to introduce tourism taxes in 2011, and today there are approximately 1,000 local Governments (municipalities) levying overnight Tassa / Imposta di Soggiorno. Venice proposes a day tax (contributo di sbarco), originally intended for 2019, now delayed to 2020 due to complexity of implementation.

Different Charges
The ways that countries, cities and municipalities charge, makes it difficult to compare tourist taxes like-for-like. City and local taxes are generally levied on overnight stays although some destinations also levy day visitors. In addition, charges can vary by season, accommodation star ratings, and areas within a destination. In Poland, the right to levy the local fee (lokalny podatek) depends on a destination meeting certain environmental conditions. In January 2018, Greece introduced Fóro Diamonís – an overnight stay tax levied throughout the country.

The main variants are:

• Flat rate per person, per night
• Flat rate per person, per night based by accommodation type and star rating
• Percentage of the room rate
• Flat rate per person, per day if not staying overnight.

Issues for the private sector
Tourism taxes are growing, adding cost and complexity to an industry that runs on tight margins. The responsibility of collection generally falls on commercial accommodation (traditionally hotels and B&B but also increasingly private landlords and platforms). There are also unintended consequences of introducing a day tax as seen in Amsterdam in 2019 with some cruise companies docking in Ijmuiden and Rotterdam to avoid paying the dagtoeristenbelasting.

ETOA lobbies for good practice in 5 areas:

1. Competitiveness
Tax is inflationary. ETOA recommends that destinations need to be aware of the cumulative effect of local taxes on competitiveness.

2. Reciprocity & Transparency
Revenue should be allocated to services and infrastructure that visitors as well as locals may use and all should be able to see the benefit. ETOA opposes any increase to industry’s cost base without reciprocal benefit. Unless intelligent investment follows and services improve, visitors may conclude that it is only their money that is welcome and go elsewhere. Tourism is integral to destinations’ success and should be treated accordingly.

Good practice examples include:

Switzerland where overnight visitors who pay the Kurtaxe/Taxe de Séjour in many destinations receive a guest card entitling the visitor to free public transport during the stay. In destinations such as Basel and Lucerne, the benefit is extended to include free Wi-Fi access at hotspots and discounted entry to visitor attractions.

ETOA encourages destinations to be specific in how tax revenue is used.

1. The Balearic Islands have published a website which details the projects funded by the ‘eco-tax’.
2. Bled and Zermatt both highlight how the tax revenue is used for specific projects.
3. To date, the tourism tax in Barcelona has subsidised 89 local projects related to tourism.

3. Notice
There should be sufficient notice of any change (especially if above inflation), preferably 18-24 months, given industry’s product budget cycle. Anything under 12 months is certain to give rise to costs that industry cannot pass on. Thus, in effect, it is a tax on operators’ margin.

4. Consultation
Consultation should be sufficiently wide and carried out with real intent to find a solution that addresses the stated problem.

ETOA welcomes the approach taken by the Scottish Government, who is still undertaking a thorough review as to whether local governments should be given the authority to implement a transient visitor levy, a form of tourist tax, as Edinburgh wish to implement a tax. More consultation is expected before the bill is tabled.

5. Payment process
Tax should be easy to pay, collect and remit by visitors and commercial accommodation providers, and be cost effective to administer.

An example of good practice in this respect is Croatia, which has an e-Visitor programme used by accommodation providers to register visitors and pay the tourist tax online.

Tim Fairhurst, Director of Policy, ETOA said: “We believe ETOA’s 2019 Tourism Tax Review provides the most comprehensive database of current tourism taxes in Europe in high volume destinations. As we now have insight into a range of practices and the impacts on our members and their customers, we can report that good governance requires an intelligent tax policy: at a local level especially, that requires thorough consultation and study. Cities need funds to keep infrastructure and services working for local communities and visitors. Implemented well, tourism taxes can be seen to support innovative and sustainable destination management. Otherwise, they add to the impression that while the money is welcome, the visitors are not.”