Pöördumise edastamine

Rahandusministeerium Meie: 09.05.2023 nr 7-5.8/23-00723-2 Pöördumise edastamine Edastan peaministrile saabunud Euroopa hotellide ja restoranide organisatsiooni HOTREC pöördumise. Lugupidamisega (allkirjastatud digitaalselt) Heili Tõnisson Valitsuse nõunik Teadmiseks: Majandus- ja Kommunikatsiooniministeerium Stenbocki maja / Rahukohtu 3 / 15161 Tallinn / Estonia / registrikood 70004809 +372 693 5555 / [email protected] / www.riigikantselei.ee  Att: Ms Kaja Kallas Prime Minister of Estonia [email protected] Copy to: Mr Mart Võrklaev Minister of Finance [email protected] Mr Tiit Riisalo Minister of Economic Affairs and Information Technology [email protected] Brussels, 3 May 2023 Subject: Increase of VAT rate for accommodation in Estonia Dear Prime Minister Kallas, HOTREC, the European umbrella organisation of hotels, bars, restaurants and cafes in Europe is very concerned with the recent announcement of the Estonian government to increase the VAT rate for accommodations. After the Covid-19 pandemic, the European hospitality sector was hoping to return to the pre-2020 ‘business-as-usual’ situation, however, the war in Ukraine, current soaring energy, food costs and labour shortages are making it extremely difficult for businesses to recover and operate in a stable economic environment. This difficult situation is reflected in the latest Eurostat data on bankruptcies and registration of new businesses1 which shows that: • Compared to pre-pandemic Q4 2019 the number of bankruptcies in the accommodation and food services sector in Q4 2022 increased by 97.7%. This is the highest number among all covered sectors. • Comparing Q3 and Q4 2022, the accommodation and food services sector accounted for the second-highest increase in the number of bankruptcies (+39.4%) behind the transportation and storage sector. Furthermore, there is concrete evidence from neighboring Latvia that the increase in the VAT rate from 5% to 21% had negative long-term consequences. For example, the turnover of the industry decreased by 33% while it is estimated that 10000 jobs were also lost2. On the other hand, In Germany, in 2016, 6 years after a reduction from 19 to 7% in the accommodation sector, it was estimated that an additional 46,666 jobs had been created. This corresponds to an increase of 18.5%, which is significant compared to the 14.6% rise in the overall economy in the same period of time3. The turnover tax increase in 2015 increased by 73 million euros compared to the last year of the higher tax rate in 20094. 1 Eurostat, Q4 2022: Business bankruptcies highest since 2015, available here 2 Travelnews.lv, Līdz ar PVN palielināšanu izmitināšanas sektoram tautsaimniecība zaudēs aptuveni 47 miljonus EUR, available here 3 Hotelverband Deutschland (2017): Branchenreport „Hotelmarkt Deutschland 2017 4 Der DEHOGA zur Fortgeltung der 7% Mehrwertsteuer für Gastronomie und Hotellerie A higher rate would also have negative consequences on the competitiveness of the Estonian tourism sector with other countries in the direct neighborhood and wider since a large majority of them still maintain reduced rates for accommodations. Evidence from across Europe shows that differentiated VAT rates for hospitality businesses are one of the most effective measures to support employment, investment and competitiveness at national level. The increase of rate would also have a detrimental impact on the competitiveness of regulated accommodations providers with Short Term Rental (STR) accommodations. The European Commission recently presented a proposal on VAT in the Digital Age5 which would also oblige STR accommodation platforms to collect and remit VAT to tax authorities. The study on ‘VAT in the Digital Age’, prepared for the European Commission and referenced in the proposals6, found that around 70% of suppliers that are using certain online platforms are not registered for VAT. Consequently, this means that the majority of STR listings can be offered at a lower price than a room in a hotel, thus impacting competitiveness amongst different accommodation providers. The argument that most of the STR hosts are individual small hosts can be rebutted with data from different capitals around the EU. In cities, such as Barcelona, Lisbon, Madrid, Prague, Rome and Vienna more than half of all available listings appear to be under the management of professional operators7. Therefore, we strongly believe that the largely unregulated and VAT-exempted STR market represents an important additional revenue opportunity for national budgets. In expressing full solidarity, HOTREC would like to strongly support our member organisation the Estonian Hotel and Restaurant Association in their efforts to not increase the VAT rate for accommodations and stand at your disposal for further information on the economic and social benefits of reduced VAT rates in Europe. Your sincerely, Alexandros Vassilikos HOTREC President HOTREC is the umbrella association of Hotels, Restaurants, Bars and Cafés and similar establishments in Europe, which brings together 47 National associations in 36 countries, and is the voice of European hospitality. HOTREC’s mission is to represent and champion its interests towards the EU and international institutions, foster knowledge sharing and best practices among its members to further promote innovation, and act as a platform of expertise for the hospitality sector. 5 European Commission, Council Directive amending Directive 2006/112/EC as regards VAT rules for the digital age, available here. 6 European Commission, Council Directive amending Directive 2006/112/EC as regards VAT rules for the digital age, pp 5-6, available here. 7 Colomb, C. and Moreira de Souza, T., 2021, Regulating Short-Term Rentals | Platform-based property rentals in European cities: the policy debates (Property Research Trust) InsideAirbnb open source data tool, based on publicly available information about a city’s Airbnb listings. For details on the methodology and assumptions used by the InsideAirbnb project contributors to design the indicators referred to here, see Inside Airbnb: About  From: Marie Audren <[email protected]> Sent: Wednesday, May 3, 2023 11:01 AM To: Kaja Kallas <[email protected]> Cc: Mart Võrklaev <[email protected]>; Tiit Riisalo <[email protected]>; Matej Zezlin <[email protected]>; Hotrec <[email protected]> Subject: Letter from European Hospitality organisation regarding VAT rate for accommodations in Estonia Dear Prime Minister, HOTREC is the European umbrella organisation of hotels, bars, restaurants and cafes in Europe. Our membership comprises 46 national associations from 37 countries, including the Estonian Hotel and Restaurant Association . We wish to share the attached letter, signed by HOTREC President, Mr Alexandros Vassilikos, whereby we express our great concerns with the recent announcement of the Estonian government to increase the VAT rate for accommodations. We are grateful for your consideration. We are looking forward to hearing back from you. In the meantime, we stand ready to provide any clarification. Yours sincerely, Marie Audren Director General INCLUDEPICTURE "cid:[email protected]" \* MERGEFORMATINET Hotels, Restaurants & Cafés in Europe Rue Dautzenberg, 36/38 1050 Brussels Belgium Tel + 32 (0)2 513 63 23 Mob. +32 (0)477 58 23 46 www.hotrec.eu INCLUDEPICTURE "cid:[email protected]" \* MERGEFORMATINET INCLUDEPICTURE "cid:[email protected]" \* MERGEFORMATINET INCLUDEPICTURE "cid:[email protected]" \* MERGEFORMATINET