Hotel City Tax in Brussels

In our last Real Estate Quarterly, we mentioned the transfer of the current “City Tax” from the Municipalities to the Region for harmonisation purposes.

The Ordinance entered into force on 1 January 2017 and the tax is due as from 1 February 2017.

Taxpayer and amount of the tax

The tax amounts to 0.0892 EUR per night and per room occupied by a tourist. The rate decreases to 0.0669 EUR in case of home-based accommodation (maximum 5 rooms).

The VAT is charged at a rate of 6% when the tax is recharged to the tourist.

The tax is due on a monthly basis by the operator of the tourist accommodation, but the owner of the accommodation can be jointly liable for the tax if (i) the operator is insolvent (in case of consistent evidences leading to a suspicion of collusion between the owner and the operator), or (ii) the operator remains unknown.

The Ordinance is unclear about the taxation of operator(s) located in Brussels but managing tourist accommodation(s) in the Flemish or the Walloon Region. However, based on the principle of territoriality, Brussels should not be allowed to tax tourist accommodations that are not located on its territory.

Intermediaries as Booking.com and AirBnB shall be invited to provide the Regional tax administration with available information about the operators, subject to penalties.

A “choice” for the Municipalities

At choice, the Municipalities can replace their current City Tax with an additional taxation on the new Regional tax (opcentiemen / centimes additionnels). As the case may be, Brussels shall take care of the collection of the tax on behalf of the Municipalities, for free.

Parliamentary documents explain however that Brussels already agreed on the transfer of the City Tax with all Municipalities for budgetary reasons.

If the City Tax as such is a Regional tax nondeductible expense for corporate income tax purposes in the hands of the taxpayer, the additional taxation to be redistributed to the Municipalities remains deductible for tax purposes.