Guidelines on Value Added Tax (VAT) in the Tourism Industry
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These guidelines aim to clarify the rules that apply to value added tax (VAT) on tourism and other travel-related services. Such services include, for example, accommodation, the sale of food and beverages, and passenger transport.
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According to Article 2 of Act No. 50/1988 on Value Added Tax (VAT), tax liability applies to all goods and valuables, whether new or used, and to all work and services that are not specifically exempt under paragraph 3 of the same article. Tourism and other travel-related services are generally subject to VAT; however, exemptions in this area include public transport and certain travel-related services such as the sale of fishing permits in rivers and lakes.
In general, tourism and other travel-related services are considered taxable turnover under Article 11 of Act No. 50/1988, but in certain cases they are regarded as exempt turnover under Article 12 of the Act, for example in the case of international passenger transport.
The sale of tourism and other travel-related services falls either under the standard VAT rate of 24% or the reduced rate of 11%. In these guidelines, reference is made to the higher and lower VAT rates, meaning the aforementioned rates.
The following provides a more detailed discussion of VAT on activities related to tourism; however, it should be noted that the discussion is not exhaustive.