Hotel tax might go up as Romanian authorities want to include breakfast in tax base

Romanian authorities want hotel tax to be paid for breakfast as well, not only for accommodation, and this will lead to a 20% hike in the hotel tax. The measure will affect profitability in the hotel sector, according to Radu Enache, president of the Federation of Hotel Industry in Romania FIHR, and owner of the Continental hotel chain. “In Romania of 2014, almost six years after the start of the economic crisis, the hotel industry remains in difficulty. An industry that was so strongly hit by the crisis in 2009, losing nearly 25% of the annual turnover, which still hasn’t recovered, was again hit by our wonderful government in 2010, by increasing the VAT for restaurants and events,” said Enache, cited by local Mediafax. He added that the hotel industry hardly managed five years ago to convince the government to keep the reduced VAT rate of 9% for breakfast, as well as for accommodation, as a positive measure counterbalancing for declining tourism. But it was a poisoned gift: including breakfast in the accommodation package created the premises for a subsequent interpretation of another tax the hotel industry has to bear - the hotel tax. According to Mediafax, the Ministry of Finance said that it still reviews the new system to calculate the hotel tax, and whether to include breakfast alongside accommodation in the taxable amount. The hotel tax is a local tax paid by hotels as a percentage of their revenues, varying between 0.5% and 5%, depending on local authorities' decision. Irina Popescu, irina.popescu@romania-insider.com