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Germany: Cologne 'Bed Tax' Unconstitutional, Leipzig Court Rules

Friday, 16 August 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

Marking a significant victory for hoteliers, Germany's Federal Administrative Court in Leipzig has ruled that the hotel levy applied in the cathedral city of Cologne between October 1, 2010, and December 31, 2012, was "unconstitutional."

As a result, Cologne City Council will be compelled to pay back the revenue that it collected at the time, from the so-called "bed tax" (Bettensteuer), to those hoteliers that submitted an appeal against the charge to the Administrative Court in Cologne. According to Germany's Hotel and Restaurant Association Dehoga, over 200 hoteliers filed an appeal challenging the levy.

At the beginning of 2010, Cologne City Council voted in favor of the highly controversial hotel tax. Hoteliers in the German city were required to pay a 5 percent levy on the price of every overnight stay, from October 1, 2010. The tax was initially to be imposed on both private individuals and on business professionals. The product of the tax, around EUR4m (USD5.3m), flowed to promote culture in the city.

In January 2013, the Supreme Administrative Court in Münster ruled that the bed tax should only be imposed on holidaymakers and private individuals. Business-related stays should remain exempt from the levy, the Court said. Consequently, Cologne City Council amended the regulations. Since January 2013 the tax is only now levied on private guests staying overnight in Cologne. The tax is expected to yield around EUR7m for the city this year.

Welcoming the decision of the Leipzig Court, Christoph Becker of Dehoga North Rhine insisted that the Council must now pay back all of the tax collected between the period 2010 and 2012, not only to those hoteliers who appealed against the fee, but to all hoteliers in Cologne subject to the charge.



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