Punishing VAT rules makes it hard for Danish hotels to compete

A high VAT rate and a lack of tax rebates are making it difficult for hotels here to compete with their counterparts in the rest of Europe, according to two new reports by the financial think-tank Copenhagen Economics.

If Danish hotels were allowed to write off 100 percent of their VAT as is the case in many other EU states, the industry could increase its turnover by 25 percent or 317-728 million kroner a year, and create as many as 2,500 new jobs.

 In neighbouring countries, Germany and Sweden, VAT rates are significantly lower at respectively 7 and 12 percent, compared to a swingeing 25 percent rate here. In both countries hoteliers are allowed rebates on the full amount of VAT paid unlike in Denmark where a maximum of 25 percent of VAT payments can be written off.

Speaking to erhvervsbladet.dk, Jens Zimmer Christensen, the head of Horesta, an association of hoteliers, said that hoteliers here suffer from a 19 percent disadvantage before they even start to compete.

’We must tell the political decision makers that this is not good enough if we are to be able to survive in the international market,’ he said.