62024CJ0409_RES
Case C‑409/24
J-GmbH
v
Finanzamt K
(Request for a preliminary ruling from the Bundesfinanzhof)
Judgment of the Court (Fourth Chamber) of 5 March 2026
(References for a preliminary ruling – Common system of value added tax (VAT) – Directive 2006/112/EC – Article 98 – Option for the Member States to apply a reduced rate of VAT to certain supplies of goods and services – Short-term accommodation in hotels and similar establishments – Annex III, point (12) – Reduced rate of VAT applicable to accommodation provided in hotels and similar establishments – Supplies that are ancillary to accommodation – National regulations establishing a mechanism for separating taxable transactions – No application of the reduced VAT rate to supplies that are not directly used for the accommodation – Principle of fiscal neutrality)
Harmonisation of fiscal legislation – Common system of value added tax – Option for the Member States to apply a reduced rate to certain supplies of goods and services – Application of a reduced rate to the provision of short-term accommodation – Exclusion of ancillary supplies that are not directly used for the short-term accommodation – Whether permissible – Conditions – Supplies that are ancillary to the principal supply of short-term accommodation – No effect
(Council Directive 2006/112, Art 98(1) and (2) and Annex III, point (12))
(see paragraphs 50-59, 67-75, operative part)
Résumé
Ruling on a request for a preliminary ruling from the Bundesfinanzhof (Federal Finance Court, Germany) in three separate cases, the Court confirms that Member States may, under certain conditions, exclude from the scope of the reduced rate of value added tax (VAT) applicable to short-term accommodation services in hotels and similar establishments supplies that are not directly used for such accommodation, even where they could be considered to be ancillary to it.
In Case C‑409/24, J, a company incorporated under German law, operated a hotel and restaurant with a car park which could be used by its guests without them having to pay a supplement. In addition to the overnight stay, the accommodation also included an optional breakfast, the cost of which would be deducted from the total amount invoiced if the customers decided to forgo the breakfast.
Taking the view that the overnight stay, the breakfast and the making available of parking spaces constituted a single supply, J applied the reduced VAT rate of 7%, as laid down by national legislation for supplies of short-term accommodation services, (
1
) to the entirety of the supply.
Finanzamt K (Tax Office K, Germany) found that the breakfast and the making available of parking spaces had to be separated from the supply of accommodation and taxed at the standard VAT rate of 19%. J lodged appeals against the assessment notices issued by that tax office, which were rejected.
In Case C‑410/24, D operated a guesthouse in the course of 2013 and offered guests overnight accommodation with breakfast, which was included in the flat-rate overall price, regardless of whether customers chose to have it or not.
After declaring in 2013 transactions at the reduced VAT rate of 7% and transactions at the standard VAT rate of 19%, D requested in 2018 that all the supplies provided in the context of short-term accommodation be taxed at that reduced rate as a single supply, a request which the Finanzamt F (Tax Office F, Germany) rejected.
In Case C‑411/24, D GmbH, a company incorporated under German law, operated two hotels with car parks and local wi-fi networks in 2011. One of those two hotels also had a gym and wellness facilities. Those amenities and facilities could be used by hotel guests at no extra cost.
D GmbH declared those supplies as supplies ancillary to short-term accommodation which were to be subject to the reduced VAT rate of 7%. However, Finanzamt A (Tax Office A, Germany) issued a decision in which it found that those transactions constituted transactions subject to VAT at the standard VAT rate of 19%.
Following the dismissal of their respective actions against the decisions of the tax offices concerned at first instance, the applicants in the main proceedings each brought an appeal on a point of law before the referring court.
That court held that, apart from the provision of the optional breakfast, which constituted an independent supply, the making available of parking spaces, a gym and wellness facilities as well as access to the hotel’s wi-fi network and the provision of an included breakfast (‘the supplies at issue in the main proceedings’) constituted supplies ancillary to the provision of short-term accommodation, since the total price paid by guests did not vary according to whether or not they were used by them. Nevertheless, since those services were not directly used for the short-term accommodation, under national law, they had to be separated from the principal supply, namely short-term accommodation, and, consequently, the reduced rate of VAT could not be applied to them.
However, the referring court has doubts as to the compatibility of such legislation with Article 98(1) and (2) of Directive 2006/112, (
2
) read in conjunction with Annex III, point (12), to that directive.
In those circumstances, it decided to stay the proceedings and to refer questions to the Court for a preliminary ruling.
Findings of the Court
As a derogation from the principle laid down in Article 96 of the VAT Directive, according to which each Member State is to apply a standard rate of VAT that is the same for the supply of goods and for the supply of services, Article 98(1) and (2) of that directive gives Member States the option of applying one or two reduced rates of VAT to supplies of goods and services in the categories set out in Annex III to that directive.
In that regard, it is settled case-law that Member States have the possibility of limiting the application of the reduced rate of VAT to concrete and specific aspects of those categories.
However, the exercise of the possibility afforded to Member States to apply selectively the reduced rate of VAT is subject to the twofold condition, first, that they isolate, for the purposes of the application of that reduced rate, only concrete and specific aspects of the category of supply at issue and, secondly, that they comply with the principle of fiscal neutrality.
As regards the first condition, it is necessary to determine whether the short-term accommodation supplies benefiting from the reduced rate of VAT under national law are identifiable, as such, separately from other supplies coming within the category set out in point (12) of Annex III to the VAT Directive, on the basis of objective, clear and precise criteria.
In the present case, national legislation provides that the reduced rate of VAT is to apply to the renting of living quarters and bedrooms as well as to the short-term renting of camping pitches, with the exception of supplies that are not directly used for the rental, even if the remuneration for those supplies is covered by the consideration for that rental.
In addition, the supplies directly linked to short-term accommodation are identified by that legislation, which also provides a non-exhaustive list of the supplies that are not eligible for the reduced rate of VAT.
Thus, subject to the verifications to be carried out by the referring court, that information is such as to make it possible to identify with certainty the accommodation supplies subject to the reduced rate of VAT, and to distinguish them from the other supplies in the category at issue, with the result that the first condition is satisfied.
The Court held, in essence, that that conclusion is not called into question by the fact that the supplies at issue in the main proceedings, the price of which is included in the flat-rate overall price of the short-term accommodation, are likely, from the point of view of the average consumer, to be regarded as being ancillary to that accommodation.
As regards the second condition, relating to compliance with the principle of fiscal neutrality, the Court recalls that that principle precludes treating similar goods or supplies of services, which are thus in competition with each other, differently for VAT purposes.
According to settled case-law, goods or services are similar where they have similar characteristics and meet the same needs from the point of view of consumers, with the result that they are interchangeable from their point of view.
Where they are interchangeable, the application of the standard rate of VAT to the supplies at issue in the main proceedings would not infringe the principle of fiscal neutrality, to the extent that those supplies, provided independently by another economic operator, are also subject to the standard VAT rate.
In that regard, in so far as, according to the referring court, the national legislation makes it possible to separate from short-term accommodation supplies that are not directly used for that accommodation and to apply to them the same rate as the one that applies to the same supplies provided in the immediate vicinity by an economic operator, such legislation does not appear to be incompatible with the principle of fiscal neutrality.
In the light of those factors, the Court finds that the national legislation at issue in the main proceedings is compatible with Article 98(1) and (2) of the VAT Directive, read in conjunction with point (12) of Annex III to that directive.
(
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)	Point (11) of Paragraph 12(2) of the Umsatzsteuergesetz (Law on Turnover Tax) of 21 February 2005 (BGBl. 2005 I, p. 386), in the version applicable to the facts in the main proceedings, provides: ‘2. The rate of tax shall be reduced to 7% in respect of the following transactions: … (11) the renting of living and sleeping spaces offered by a trader for the short-term accommodation of third parties, and the short-term renting of camping pitches. The first sentence shall not apply to supplies that are not directly used for the rental, even if the remuneration for those supplies is covered by the consideration for that rental.’
(
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)	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’).