62024CC0409
OPINION OF ADVOCATE GENERAL
ĆAPETA
delivered on 25 September 2025 (
1
)
Joined Cases C‑409/24 to C‑411/24
J-GmbH
v
Finanzamt K (C‑409/24)
and
D
v
Finanzamt F (C‑410/24)
and
D GmbH & Co. KG
v
Finanzamt A (C‑411/24)
(Request for a preliminary ruling from the Bundesfinanzhof (Federal Fiscal Court, Germany))
(Reference for a preliminary ruling – Value added tax (VAT) – Directive 2006/112/EC – Accommodation in hotels and similar establishments – Reduced rate of VAT – Services ancillary to the accommodation)
I. Introduction
1.
Must breakfast, or other ancillary services offered by hotels and similar establishments that provide short-term accommodation, be taxed separately from the supply of accommodation, or could it, as an ancillary service, be taxed at the same, lower rate as the principal supply?
2.
That is essentially what is at issue in the three joined requests for a preliminary ruling submitted to the Court by the XI Chamber of the Bundesfinanzhof (Federal Fiscal Court, Germany, ‘the BFH’).
II. The background to the proceedings, the questions referred and the procedure before the Court
3.
Those three cases for which three preliminary rulings have been requested, question the compatibility of Paragraph 12(2)(11) of the German Umsatzsteuergesetz (Law on Turnover Tax; ‘the UStG’) (
2
) with the VAT Directive. (
3
)
4.
Under that provision, the German legislature fixed a reduced tax rate, within the meaning of Article 98(1) and (2) of the VAT Directive, for services listed in Annex III to that directive, in particular, for the provision of services in Point 12 of that annex.
5.
The first sentence of Paragraph 12(2)(11) of the UStG sets a reduced tax rate on the provision of short-term accommodation and campsites. However, the second sentence thereof limits the application of that reduced rate to the provision of accommodation for the purpose of letting. It reads: ‘The first sentence shall not apply to supplies of goods and services which are not directly used for the letting, even if they are covered by the rental charge.’
6.
The BFH asks, in essence, whether the VAT Directive precludes a national provision limiting the application of the reduced rate with regard to short-term accommodation to the principal supply, but excluding dependant ancillary supplies from the possibility of benefiting from that reduced rate.
7.
The facts in the three litigations, which resulted in the current proceedings, are the following.
Case C‑409/24
8.
J-GmbH, the applicant in the main proceedings, operated a hotel and restaurant. In addition to accommodation, hotel guests could also have breakfast, which was separately charged at EUR 4.50 if a guest opted for room only. Additionally, the hotel and restaurant had its own car park, which could be used free of charge.
9.
Since June 2018, the applicant in the main proceedings had been applying a reduced tax rate of 7% to accommodation, breakfast and parking, treating them all as a single supply.
10.
Following two tax audits carried out at the applicant’s premises for the months of April to June 2018 and July 2018 to May 2019, the tax auditors and Finanzamt K (Tax Office K) determined that breakfast and parking should be taxed at the standard rate of 19%, arguing that they are separate, independent services, not ancillary to accommodation. That determination led to higher tax assessments with respect to the hotel.
11.
J-GmbH appealed against those assessments to the Sächsisches Finanzgericht (Finance Court, Saxony, Germany), which dismissed the appeal, agreeing with Tax Office K in its ruling that breakfast and parking were independent services. Even if they were to be considered ancillary supplies, they would still be excluded from the reduced tax rate under Paragraph 12(2)(11) of the UStG.
12.
J-GmbH then lodged an appeal before the BFH, arguing that that national provision, requiring the breakdown of services for tax purposes, is not compatible with EU law. The applicant in the main proceedings considers that the judgment of 18 January 2018, Stadion Amsterdam, (
4
) prohibits the artificial splitting of principal and ancillary supplies, and therefore persists in its assertion that breakfast and parking should be taxed at the reduced rate of 7%.
13.
Tax Office K maintained its stance, arguing that breakfast and parking are independent services and that the judgment cited by the hotel owner is not applicable in this case. In support of its argument, that tax office referred to another judgment of the Court, of 6 May 2010, Commission v France, (
5
) which, in its view, acknowledged that national breakdown requirements are permissible.
14.
The case was stayed pending a decision from the Court in another case, that of Finanzamt X (Permanently installed equipment and machinery). Following the Court’s judgment in that case on 4 May 2023, (
6
) J-GmbH believed its position to be confirmed, as the Court rejected the artificial splitting of single supplies. However, Tax Office K argues that the judgment in Finanzamt X is irrelevant and that its interpretation of national law, which allows for the breakdown of services, is still valid under EU law.
15.
While the BFH agrees with the Sächsisches Finanzgericht (Finance Court, Saxony) that breakfast constitutes an independent service excluded from the benefit of the reduced rate under Paragraph 12(2)(11) of the UStG, the referring court nonetheless considers that the provision of parking spaces is a service ancillary to the supply of accommodation, since the former is inextricably linked to the latter.
Case C‑410/24
16.
In 2013, D, the applicant in the main proceedings, operated a guesthouse. It offered guests accommodation and breakfast at an all-inclusive price; guests could not opt out of breakfast. In respect of the supplies provided, the applicant issued invoices showing gross amounts for accommodation including breakfast. Rates or amounts of tax were not shown.
17.
In the turnover tax return filed with Finanzamt F (Tax Office F) for that year, the applicant declared both services, one at a reduced rate of 7% and the other at the standard rate of 19%.
18.
Following the judgment in Stadion Amsterdam, D, by letter dated 19 December 2018, requested that the tax assessment be amended in accordance with Paragraph 164(2) of the Abgabenordnung (Tax Code). As grounds for that request, D relied on the fact that all turnover generated in conjunction with the guesthouse is to be subject to the reduced tax rate of 7%.
19.
Tax Office F rejected the request for amendment by notice of 8 February 2019. After a failed internal appeal, D brought an action against that rejection.
20.
At first instance, the Hessisches Finanzgericht (Finance Court, Hesse) dismissed the action, considering that the breakfast service provided by D was not subject to the reduced tax rate, but instead to the standard rate laid down in Paragraph 12(1) of the UStG. (
7
)
21.
By its appeal before the BFH, D submits that breakfast is a dependent supply ancillary to the provision of accommodation. Guests who did not take breakfast also paid the full price, with one single exception. (
8
) The breakdown requirement laid down in the second sentence of Paragraph 12(2)(11) of the UStG would, according to D, not be permissible following the Court’s judgment in Stadion Amsterdam, because a single supply of services must be subject to a single tax rate which is determined on the basis of the principal supply. Nothing to the contrary would follow from Article 98 of the VAT Directive, which provides for the right of Member States to apply reduced rates.
22.
Tax Office F requests that the appeal on a point of law be dismissed as unfounded.
23.
That tax office refutes D’s submissions by claiming that, in Finanzamt X, the Court did not have to rule on a national breakdown requirement, since point (a) of the first subparagraph of Paragraph 4(12) of the UStG, in conjunction with the second subparagraph thereof, does not lay down such a requirement. It is, however, laid down in the second sentence of Paragraph 12(2)(11) of the UStG. That judgment cannot therefore be applied analogously to the reduced rate under Paragraph 12(2)(11) of the UStG. Since the breakdown requirement laid down in the second sentence of Paragraph 12(2)(11) of the UStG supersedes the principle of a single supply, it is irrelevant whether the breakfast service at issue is to be assessed as an ancillary service or as an independent one.
Case C‑411/24
24.
In 2011, D GmbH & Co. KG operated hotels A and B. Both hotels had a car park, including spaces for motor vehicles. Guests staying at the hotels, as well as the public, could use those spaces without being charged separately. In addition to accommodation and parking, the applicant offered a wireless local area network (Wi-Fi), and one of the hotels had fitness and wellness facilities; neither was subject to a separate charge.
25.
In its turnover tax return for that year, D GmbH & Co. KG declared the supply of goods and services both at the standard rate of 19% and the supply of goods and services at the reduced rate of 7%. It took the view that the provision of parking spaces was a supply ancillary to the provision of accommodation that was subject to reduced taxation.
26.
Finanzamt A (Tax Office A) did not share that view and, consequently, issued a turnover tax assessment notice subject to review for 2011.
27.
D GmbH & Co. KG appealed, requesting taxation in accordance with its return, claiming that the provision of parking spaces free of charge is a supply ancillary to the supply of accommodation which, like the latter, should be subject to the reduced rate.
28.
Following a tax audit in 2011 at the applicant’s premises, the auditor held that the standard rate was applicable to the provision of the parking spaces and also to that of the Wi-Fi network and the fitness and wellness facilities.
29.
Tax Office A followed the auditor’s opinion and issued a turnover tax amendment notice for the year at issue, on 21 November 2018. This amendment notice was also appealed. By its decision of 30 July 2019, Tax Office A rejected the applicant’s appeal as unfounded.
30.
The competent Finanzgericht (Finance Court, Germany) dismissed the action with a reasoning comparable to that given by the Hessisches Finanzgericht (Finance Court, Hesse) in Case C‑410/24.
31.
By its appeal before the BFH, D GmbH & Co. KG submits that there have been various infringements of law. The applicant maintains, first, that the Finanzgericht (Finance Court) erred in law in classifying the provision of Wi-Fi, parking spaces and fitness and wellness facilities as a service for consideration within the meaning of Paragraph 1(1)(1) of the UStG; second, that that court failed to recognise that the additional services are directly used for letting, within the meaning of the second sentence of Paragraph 12(2)(11) of the UStG; and, third, that said court did not take account of the principle of a single supply as recognised by EU law.
32.
While D GmbH & Co. KG recognises that the Court of Justice held, in in Commission v France, that Article 98 of the VAT Directive authorises Member States to apply reduced rates selectively to certain aspects of a particular category listed in Annex III to that directive, that case-law would not constitute a restriction on the principle of a single supply arising from Article 2 of that directive. It is similarly apparent from the Court’s judgment in Stadion Amsterdam that the average consumer will assume that all additional supplies are attributable to the letting of a hotel room as the clearly dominant principal supply. According to the case-law of the Court, this would require applying the reduced rate, applicable to the letting of a hotel room, to those additional supplies as well.
33.
D GmbH & Co. KG therefore seeks an order setting aside the preliminary decision, the appeal decision of 30 July 2019 and the turnover tax amendment notices for 2011.
34.
Tax Office A requests that the appeal on a point of law be dismissed as unfounded.
35.
That office defends the contested preliminary decision, arguing, inter alia, that the provision of Wi-Fi, parking spaces and fitness and wellness facilities is not to be regarded as a service directly used for letting. Those supplies would, in line with the German legislature’s intention expressed in the breakdown requirement, not be subject to the reduced tax rate.
36.
The case in the main proceedings was also stayed due to the litigation before the Court of Justice in the Finanzamt X case.
37.
Following that judgment, D GmbH & Co. KG believes its view of the law has been confirmed. If applied to the present case, the ancillary supplies at issue must also be subject to the reduced rate provided for in Paragraph 12(2)(11) of the UStG.
38.
Tax Office A refutes this by claiming that the Court’s judgment in Finanzamt X cannot be applied to the matter under examination for reasons identical to those stated by Tax Office F in Case C‑410/24.
The referring court’s grounds for referring those three cases to the Court of Justice
39.
As it explains in its orders for reference, the BFH was initially convinced that the breakdown requirement under Paragraph 12(2)(11) of the UStG was compatible with EU law because, under Article 98(1) and (2) of the VAT Directive, Member States may apply a reduced rate of VAT only to concrete and specific aspects of a category of supplies listed in Annex III to that directive, provided that they comply with the principle of fiscal neutrality inherent in the common system of VAT.
40.
In the referring court’s initial view, under Paragraph 12(2)(11) of the UStG, services not directly related to accommodation, such as the provision of parking spaces free of charge (Cases C‑409/24 and C‑411/24), of breakfast (Case C‑410/24) and of a local wireless internet network and fitness and wellness facilities, also free of charge (Case C‑411/24), must be taxed separately and at the standard rate. That position was based on the belief that EU Member States have the discretion to apply reduced VAT rates selectively to specific aspects of the category of supplies listed in Annex III to the VAT Directive, provided that fiscal neutrality is maintained. The referring court considered that the breakdown requirement actually prevents distortion of competition by ensuring that a hotel’s ancillary services are taxed at the same rate as those offered by standalone businesses (for example, a car park operator).
41.
However, as that court explains, recent case-law of the Court has cast doubt over the referring court’s belief in the correctness of its conclusions. While the BFH initially believed that the judgments in Commission v France, Stadion Amsterdam and Finanzamt X, for example, did not fundamentally alter the permissibility of selective reduced rates, a specific statement in paragraph 33 of Stadion Amsterdam has cast serious doubt on the matter. That paragraph suggests that a single supply comprising both a principal and an ancillary element, which would otherwise be subject to different VAT rates if supplied separately, must be taxed solely at the rate applicable to the principal element. The BFH is now concerned that this could imply that differing VAT rates for components of a single supply are prohibited under EU law, potentially meaning that ancillary services should also benefit from the reduced rate when they are part of a single supply of accommodation, overriding the national breakdown requirement.
42.
The BFH further points out that there is a difference of opinion within Germany. Some finance courts and academics support the initial view of the BFH on the compatibility of the breakdown requirement, while a growing number believe that the reduced rate should extend to ancillary accommodation services based on the principle of a single supply. Given these profound and unresolved doubts, and the fact that the judgment in Finanzamt X did not dispel those doubts in the specific context of ancillary services offered at hotels, the BFH has decided to seek a definitive ruling from the Court of Justice on whether EU law allows the breakdown requirement as imposed by the national law at issue.
43.
To dispel its doubts, the Bundesfinanzhof (Federal Fiscal Court) decided to stay the proceedings and to refer three almost identical questions, broken down into one, to the Court of Justice for a preliminary ruling:
‘Are Article 24(1) and Article 98(1) and (2) of [the VAT Directive], read in conjunction with Point 12 of Annex III thereto, to be interpreted as meaning that they preclude a national provision such as the second sentence of Paragraph 12(2)(11) of the [UStG], under which a Member State may exclude, by means of a national requirement to break down transactions for tax purposes, supplies from the reduced tax rate provided for by the Member State for the letting of living and sleeping spaces offered by a trader for the short-term provision of accommodation to strangers, which supplies do not directly serve the letting purpose but are remunerated by the consideration for such letting, even if those supplies are dependent supplies ancillary to the short-term provision of accommodation to strangers, such as[:]
–
(only) the provision of parking spaces as in [Case C‑409/24;]
–
the supply of breakfast as in [Case C‑410/24;]
–
the provision of parking spaces, [of] fitness and wellness facilities and of the hotel’s own wireless local network (Wi-Fi network) as in [Case C‑411/24]?’
44.
Pursuant to point 18 of the Court of Justice’s ‘Recommendations to national courts and tribunals in relation to the initiation of preliminary ruling proceedings’, (
9
) inviting national courts to briefly state their view on the answer to be given to the questions referred for a preliminary ruling, the BFH indicates in its orders for reference that, in its view, national legislation, such as the UStG which, in Paragraph 12(2)(11) thereof, requires ancillary hotel services to be taxed separately and at the standard rate, is compatible with EU law, even when those services form part of a single supply with regard to accommodation.
45.
The referring court bases its opinion on its interpretation of specific judgments of the Court, namely those of 22 September 2022, The Escape Center (C‑330/21, The Escape CenterEU:C:2022:719,) and of 8 February 2024, Valentina Heights (C‑733/22, Valentina HeightsEU:C:2024:126,). While the judgment in The Escape Center acknowledged that coaching linked to sports facilities could be part of a single supply subject to a reduced rate, the BFH emphasises that that judgment, citing earlier cases like Commission v France and Phantasialand, (
10
) re-affirmed that Member States may limit reduced VAT rates to ‘concrete and specific aspects’ of a supply category, as long as the principle of fiscal neutrality is complied with.
46.
The BFH interprets this to mean that, even when there is a single supply, selective application of the reduced rate remains permissible provided it does not distort competition. That court is of the view that the breakdown requirement in Paragraph 12(2)(11) of the UStG precisely favours competition by preventing hotels from offering services like breakfast or parking at a lower VAT rate than a competing standalone restaurant or car park. The BFH further finds support for its view in Valentina Heights, which confirmed that Member States may selectively apply reduced rates on the two-fold condition that such an application both targets concrete and specific aspects of a supply category and adheres to fiscal neutrality.
The procedure before the Court of Justice
47.
By decision of 15 July 2024, the President of the Court of Justice joined Cases C‑409/24, C‑410/24 and C‑411/24.
48.
Written observations were submitted to the Court by the German Government and the European Commission.
49.
Although the German Government submitted a reasoned request for a hearing, pursuant to Article 76(1) of the Rules of Procedure of the Court of Justice, the Court considers that it has sufficient information available to it from the material in the file and decides, pursuant to that article, not to hold a hearing.
III. Analysis
50.
By its questions, fundamentally identical across all three cases, the referring court asks, in essence, whether Article 24(1) and Article 98(1) and (2) of the VAT Directive, read in conjunction with Point 12 of Annex III thereto, must be interpreted as meaning that they preclude a national provision under which lodging establishments are required to tax services at the standard rate and separately from the short-term accommodation, which benefits from a reduced rate, even if those services are a dependant supply ancillary to that short-term accommodation.
51.
At the outset, it must be recalled that the VAT Directive recognises only two kinds of supply, that is, the supply of goods and the supply of services. Article 24 of that directive applies to the latter.
52.
With regard to the supply of services, Article 98 of the VAT Directive provides for the right of Member States to apply a reduced rate for specific supplies listed in Annex III to that directive. Point 12 of that annex provides for such a possibility for ‘accommodation provided in hotels and similar establishments, including the provision of holiday accommodation and the letting of places on camping or caravan sites’.
53.
Paragraph 12(2)(11) of the UStG states the same in its first sentence. However, the second sentence of that provision, which is at issue in all three cases here, limits the application of a reduced rate only to services of accommodation, requiring that other supplies not directly used for letting be taxed separately, even if they are paid for as part of a single remuneration for accommodation.
54.
The litigations pending before the referring court concern different ancillary services that are connected to short-term accommodation, such as breakfast, parking, access to the fitness and wellness centre and the provision of Wi-Fi.
55.
I would like to make some preliminary remarks concerning those supplies and the scope of the VAT Directive (A), before assessing the referring court’s question (B).
A.
Preliminary remarks
56.
It is questionable whether all the circumstances in the three proceedings before the referring court actually constitute taxable transactions under the VAT Directive.
57.
On the one hand, it could be argued that the consideration for those ancillary services is integrated within the general consideration for the supply of accommodation.
58.
Indeed, it is settled case-law that the circumstance that a single price is invoiced, or that separate prices were contractually stipulated, has no decisive significance for the purposes of determining whether it is necessary to find that there are two or more distinct and independent transactions or only a single economic transaction. (
11
)
59.
However, on the other hand, the referring court found that parking (Cases C‑409/24 and C‑411/24), access to the fitness and wellness centre and Wi-Fi (Case C‑411/24) were offered free of charge (‘kostenfrei’ or ‘kostenlos’ in German).
60.
Pursuant to Article 2(1)(c) of the VAT Directive, a taxable operation involves only transactions which consist of a ‘supply of services for consideration within the territory of a Member State by a taxable person acting as such’.
61.
Therefore, subject to final verifications by the referring court, the supplies at issue in Cases C‑409/24 and C‑411/24, whether ancillary or not, could not be considered a supply of services, within the meaning of the VAT Directive, if they are not provided for consideration. (
12
)
62.
In other words, where services ancillary to the letting of accommodation are offered free of charge, the question regarding the appropriate rate of taxation does not arise, as those transactions are not taxable transactions if they are not offered for consideration.
63.
Consequently, I will respond to the questions of the referring court on the premiss of Case C‑410/24, which concerns the provision of breakfast, consideration for which has been clearly identified.
B.
Assessment of the question
64.
The circumstances in Case C‑410/24 are indicative of where the referring court has doubts, on account of the fact that the lodging establishment operates on an all-inclusive basis – bed and breakfast, for which the consideration of the breakfast, though identified, cannot be opted out of by the guests.
65.
The consequence of the German law at issue is that, even if bed and breakfast may be understood by a consumer as a single composite supply, the services of which it is composed are split for VAT purposes. The German legislature thus decided to reduce the VAT rate only for the short-term accommodation (bed), and not for any ancillary service (breakfast).
66.
The applicants in the cases before the referring court submit that provision of services ancillary to short-term accommodation should equally be subject to the reduced rate.
67.
The Commission is also of the view that services provided in addition to accommodation must, given their ancillary nature, be taxed at the same rate as the principal supply.
68.
The main reason behind such an argument lies in the circumstance that the contractual arrangements, such as breakfast in Case C‑410/24, are not optional.
69.
By contrast, the German Government considers that the VAT Directive does not preclude the requirement under national law for those services to be separated for VAT purposes, even if booking a room with breakfast included is the only option available to customers.
70.
To start with, it should be recalled that the principle under the VAT Directive, as stated in the second subparagraph of Article 1(2) and in Article 2 of that directive, is that every transaction must normally be regarded as being distinct and independent. (
13
)
71.
However, there are certain exceptions to that rule, such as single complex supplies and dependent ancillary supplies. (
14
) As with all exceptions, those must be interpreted strictly. (
15
)
72.
While it is true that Member States must, when deciding which specific supplies should benefit from the reduced VAT rate, take into account the exceptions to the principle of independent taxation of each transaction, the question whether a certain supply represents an ancillary one, in order for it not to be separated from the principal supply for taxation purposes, must be examined on a case-by-case basis. (
16
)
73.
In the particular case at issue, I am of the opinion that the VAT Directive does not preclude national legislation such as Paragraph 12(2)(11) of the UStG.
74.
In Commission v France, (
17
) the Court considered that the prerogative of Member States to introduce reduced rates is subject to a twofold condition: first, to isolate for that purpose only concrete and specific aspects of the category of supply at issue and, second, to comply with the principle of fiscal neutrality. (
18
) Subsequent case-law, including, as I will explain, Stadion Amsterdam, does not affect those conditions nor the prerogative of Member States to introduce a reduced rate only for part of the composite supply.
75.
I am of the view that the German legislation at issue respects both conditions and is thus not contrary to Article 98(1) and (2) of the VAT Directive.
76.
In the first place, the breakdown requirement introduced by the German legislation at issue is in line with the meaning and scope of Article 98(1) and (2) of the VAT Directive.
77.
That provision enables Member States to choose to apply the reduced VAT rate to certain types of supply, and to do so for different reasons.
78.
It is clear that the rationale behind the reduced rate for the short-term accommodation industry lies in the support for tourism. (
19
)
79.
Given that people who travel also need to eat, one may consider that reduced VAT rates on breakfast might also be beneficial to favour tourism. However, the German legislature did not opt for reduced VAT rates for the supply of breakfast. Under Annex III to the VAT Directive (Point 12a of that annex), Member States may opt for reduced rates for food supplies. A number of Member States indeed apply a reduced rate for the supply of food, such as breakfast. (
20
) However, that was not the case in Germany at the time. (
21
)
80.
On a side note, the use of facilities such as fitness and wellness centres could equally qualify for a reduced rate, but few Member States appear to have used discretion in that area. (
22
)
81.
My point is that, theoretically, the different supplies concerned in the main proceedings might all qualify for a reduced rate, and such reduced rates might benefit tourism.
82.
However, the German legislature clearly opted for the reduced rate only with respect to accommodation, even if it acknowledged that there are ancillary services offered within such a supply, and that sometimes the single price is offered to customers for both the accommodation and any ancillary services. Therefore, the German legislature exercised its discretion in applying reduced rates of VAT to only concrete and specific aspects of the category of supply of short-term accommodation.
83.
The judgment in Stadion
Amsterdam does not affect the conclusion that breakfast can be treated as a separate supply for VAT purposes, even if it represents an ancillary service to accommodation. That case concerned the VAT treatment of a ‘World of Ajax’ tour package, which included a tour of the main stadium in Amsterdam and free admission to the AFC Ajax museum. The relevant legal question was whether those two elements should be treated as a single, indivisible supply for VAT purposes, or as two separate supplies with different VAT rates. The stadium operator, Stadion Amsterdam, had applied the reduced VAT rate to the entire package, but the Dutch tax authorities believed only the museum visit should qualify for it.
84.
The Court reviewed its established case-law on composite supplies, which holds that a transaction consisting of several elements should not be artificially split. (
23
) It then considered whether the two services were so closely linked that they constituted a single, economically indivisible supply from the perspective of the average consumer. It reasoned that a consumer would view the stadium tour and the museum visit as a single package, with the latter being a natural and integral part of the overall experience. Therefore, it concluded that the transaction was a single supply of services. (
24
)
85.
In the present case, it cannot be stated that accommodation and breakfast represent an indivisible supply. (
25
) After all, many hotels offer those two services separately. Even if, in the eyes of a consumer, accommodation that does not offer the possibility to opt out of breakfast may therefore be seen as a single supply, it is not a sufficient reason to prevent the national legislature from narrowing down the reduced rate to an identifiable and separable supply. In Stadion Amsterdam there was no prerogative for the national legislature to confine reduced VAT to a single element of a composite supply, unlike in the present case. (
26
)
86.
In the judgment in Finanzamt X, which was also mentioned by the parties to the main proceedings, the Court was asked to rule on the VAT exemptions provided for by the VAT Directive itself, not on reduced rates applied by Member States to certain services on the basis of the discretion left by that directive, as in the present case. Nevertheless, that case also concerned the question whether a composite transaction, but single from an economic point of view – consisting, on the one hand, of the exempted services that made up the principal supply and, on the other hand, of ancillary services that were taxable services on the basis of the exception to exemption from VAT – should be split for VAT purposes. In that case, the Court considered that the ancillary services are inseparable from that principal supply and that in such a case the former follows the tax treatment of the latter. (
27
)
87.
In the present case, as already stated, the ancillary supply is not inseparable from the principal supply. Furthermore, the decision as to which should be subject to reduced tax is at the discretion of Member States, unlike the exemption from VAT, which is harmonised by the VAT Directive and leaves no choice to Member States.
88.
The German legislation at issue clearly specified which particular aspect of a complex supply it would apply a reduced VAT rate to. Accommodation can be clearly separated and identified with regard to other ancillary supplies, such as breakfast, access to a fitness and wellness centre, Wi-Fi or parking. Furthermore, those ancillary supplies are not indispensable or inseparable from the supply of accommodation. Therefore, even if it is possible that consumers might view the entire package as a single supply, this does not prevent national legislation, such as that at issue in the present case, from insisting on the separate treatment of those supplies for VAT purposes.
89.
In the second place, the German legislation at issue is in conformity with the principle of fiscal neutrality.
90.
That cardinal principle in the VAT system precludes, in particular, economic operators carrying out the same transactions from being treated differently in relation to the collection of VAT. (
28
)
91.
In that regard, I agree with the referring court that the proposed solution promotes fiscal neutrality. It prevents lodging establishments from being given an unfair advantage over other operators offering comparable services, such as bars, brasseries, car parks, wellness centres, internet cafés, and so on. If breakfast were taxed at the same reduced rate as accommodation in a hotel, other establishments offering that same service would be placed in a disadvantaged position, as the breakfast they offer would be subject to the standard rate.
92.
Therefore, the German legislation at issue also satisfies the second condition for introducing the reduced VAT rate, as it complies with the principle of fiscal neutrality.
93.
For the above reasons, I am of the view that Article 98(1) and (2) of the VAT Directive, read in conjunction with Point 12 of Annex III thereto, must be interpreted as meaning that it does not preclude a national provision under which lodging establishments are required to tax services, such as breakfast, at the standard rate and separately from the short-term accommodation, which benefits from a reduced rate, even if those services are a dependant supply ancillary to that short-term accommodation.
IV. Conclusion
94.
In the light of the foregoing, I propose that the Court of Justice answer the question referred by the Bundesfinanzhof (Federal Fiscal Court, Germany) as follows:
Article 98(1) and (2) of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, read in conjunction with Point 12 of Annex III thereto,
must be interpreted as meaning that it does not preclude a national provision under which lodging establishments are required to tax services, such as breakfast, at the standard rate and separately from the short-term accommodation, which benefits from a reduced rate, even if those services are a dependant supply ancillary to that short-term accommodation.
(
1
)	Original language: English.
(
2
)	Of 21 February 2005 (BGBl. 2005 I, p. 386).
(
3
)	Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’), in the version applicable to the dispute in the main proceedings.
(
4
)	C‑463/16, ‘Stadion Amsterdam’, EU:C:2018:22.
(
5
)	C‑94/09, Commission v France, EU:C:2010:253.
(
6
)	C‑516/21, ‘Finanzamt X’, EU:C:2023:372.
(
7
)	To do so, that court opined that the reduced tax rate laid down in the first sentence of Paragraph 12(2)(11) of the UStG is limited to the supply of letting or accommodation. The second sentence of that provision lays down a requirement to break down, for tax purposes, the supply of services not directly used for letting (‘the breakdown requirement’). The principle that a (dependent) ancillary supply shares the tax treatment of the principal supply is, according to that court, superseded by this breakdown requirement. This is consistent with EU law because, under Article 98(1) and (2) of the VAT Directive, Member States may apply a reduced rate of VAT to (only) concrete and specific aspects of a category of supply as set out in Annex III to that directive, provided that the principle of fiscal neutrality inherent in the common system of VAT is observed. The fact that an all-inclusive price was agreed in the case at issue does not give rise to any other assessment.
(
8
)	The order for reference alludes to that exception twice without providing further explanation.
(
9
)	OJ C, C/2024/6008, p. 1.
(
10
)	Judgment of 9 September 2021 (C‑406/20, EU:C:2021:720).
(
11
)	See, to that effect, judgments of 25 February 1999, CPP (C‑349/96, EU:C:1999:93, paragraph 31 and the case-law cited), and of 26 May 2016, Bookit (C‑607/14, EU:C:2016:355, paragraph 26 and the case-law cited).
(
12
)	That was indeed the argument submitted by D GmbH & Co. KG in its appeal before the BFH in the litigation in the main proceedings in Case C‑411/24.
(
13
)	See the recent judgment of 1 August 2025, Határ Diszkont (C‑427/23, EU:C:2025:596, paragraph 37 and the case-law cited).
(
14
)	Those exceptions were explained in detail in the Opinion of Advocate General Kokott in Frenetikexito (C‑581/19, EU:C:2020:855, point 21 et seq.).
(
15
)	See, to that effect, Commission v France, paragraph 29, as well as judgments of 9 November 2017, AZ (C‑499/16, EU:C:2017:846, paragraph 24 and the case-law cited), and of 5 September 2019, Regards Photographiques (C‑145/18, EU:C:2019:668, paragraph 43).
(
16
)	Commission v France, paragraphs 32 and 33.
(
17
)	In that judgment, the national legislation at stake concerned a reduced VAT rate for certain funeral services, namely transportation of the deceased. The Commission considered that all the services and goods supplied by undertakers, such as the management of funeral homes, embalming, the organisation of funerals and similar, constitute, together with the transportation of the deceased, a single complex transaction for the purposes of VAT, which must, consequently, be subject to a single rate of tax. However, the Court ultimately rejected the Commission’s infringement application, holding that the French Republic had not infringed the VAT Directive because the services in question, such as the transportation of the deceased, could be considered a distinct supply from the overall funeral service. That was so despite the fact that funeral services might be understood as a single service in the eyes of a consumer.
(
18
)	Commission v France, paragraph 30.
(
19
)	Tosi, L. and Bagarotto, E.-M., ‘Access Fees to Cultural Heritage Cities: Way to Promote Sustainable Tourism?’World Tax Journal, 2021, 283-307, pp. 290 (acknowledging that although most Member States have used that discretion, that consideration still applies to avoid any comparative advantage).
(
20
)	European Commission, VAT rates applied in the Member States of the European Union – Situation at 1st January 2020, Taxud.c.1(2020), p. 5.
(
21
)	The Federal Republic of Germany does not appear to apply that reduced rate to the provision of meals in restaurants, with the exception of during the COVID-19 pandemic, even though the German Government is now contemplating securing the reduced rate from 1 January 2026; https://www.vatcalc.com/germany/germany-rolls-over-hospitality-vat-rate-cut-to-7-into-2023/.
(
22
)	European Commission, op. cit., p. 5.
(
23
)	Stadion Amsterdam, paragraph 22.
(
24
)	Stadion Amsterdam, paragraphs 23 to 25. Ultimately, the Court ruled that since the stadium tour was the principal element of the ‘World of Ajax’ package and the museum visit was ancillary, the entire package should be subject to the VAT rate applicable to the principal supply.
(
25
)	On that matter, see also point 21 of and footnote 8 to the present Opinion.
(
26
)	See, to that effect, Stadion Amsterdam, paragraph 35.
(
27
)	Finanzamt X, paragraph 38.
(
28
)	See the recent judgment of 1 August 2025, Galerie Karsten Greve (C‑433/24, EU:C:2025:600, paragraphs 35 and 41 and the case-law cited).