As predicted by
EuroBTN, Germany's federal ministry of finance last week issued a set of regulations to help companies overcome unintended consequences of a recent cut in value-added tax on hotels that threatened administrative chaos for corporate travel departments.
Although Germany cut VAT on room rates to 7 percent on Jan. 1, it retained the standard 19 percent rate for other items on the hotel bill, including meals. This meant hotels had to start itemizing breakfasts separately, which led to business travelers busting the strict per diem meal allowances that govern how much they can spend on food without becoming liable for personal taxation
(EuroBTN, March 3).
The ministry has now announced that breakfast can be included with other additional services that are recognized as "other" travel expenses and therefore escape the meal per diem net. Separate accounting of accommodation and a flat rate for these additional services allows for the application of a so-called simplification rule applying a standard flat rate for breakfast of €4.80.
"This circular from the federal ministry of finance will finally calm the controversy on the excessive bureaucracy involved and give travel managers and accounts clerks the assurance they need," said Dirk Gerdom, president of the German travel managers association VDR. It was one of several German business associations which had lobbied the government for a change.
The circular also simplifies a requirement that only an employer can originate a hotel booking if it is to be VAT-compliant. Under the new guidance, a booking can be compliant if a company clarifies reservation procedures in its hotel policy, for example by stating that they must use the company's authorized self-booking tool.
Meanwhile, a survey of 126 of the VDR's 512 members released earlier this month revealed that 53 percent expect their volume of travel to start rising again before the end of the year. A further 23 percent tip recovery for the first half of 2011. One in 10 travel managers believe they will never travel as much in future as they have in the past.