Spain Threatens Hotel Tax Hike

Spain is considering hiking tax on hotel rooms to help it meet tough public deficit targets.

Spain’s current rate for value added tax is 18% but many products, including hotel rooms, are charged at a reduce rate of 8%. Some other products pay a “super-reduced” rate of only 4%.

The European Commission and the International Monetary Fund have both recommended Spain revises its VAT levels following the country’s request for a bailout for its banks of up to €100bn, and the country’s finance ministry has confirmed it is considering increasing the lower rate of VAT to boost revenues.

VAT increases will not take effect until next year and  the government has yet to announce specific figures.