VAT and invoicing across the EU: a hotelier's field guide.

Why hotel VAT is more complicated than retail VAT

Most EU countries apply a reduced VAT rate to accommodation specifically, sitting below their standard rate, as a matter of tourism policy — but the reduced rate rarely covers everything on a guest's folio. Room revenue typically qualifies for the reduced rate; restaurant service, minibar, spa treatments and other extras frequently do not, and get taxed at the standard rate instead. Getting this split right on every invoice is the single most common VAT error we see at independent properties switching to Sabee, particularly ones migrating from a manual spreadsheet-based billing process.

Accommodation VAT rates across the EU

Below are standard and accommodation (reduced) VAT rates for ten EU countries where Sabee has an active customer base. The accommodation rate is what typically applies to the room-only charge; the standard rate is what usually applies to non-accommodation extras on the same folio.

• Estonia — standard rate 24%, accommodation rate 13%.
• Germany — standard rate 19%, accommodation rate 7%.
• France — standard rate 20%, accommodation rate 10%.
• Italy — standard rate 22%, accommodation rate 10%.
• Spain — standard rate 21%, accommodation rate 10%.
• Portugal — standard rate 23%, accommodation rate 6%.
• Greece — standard rate 24%, accommodation rate 13%.
• Austria — standard rate 20%, accommodation rate 13%.
• Netherlands — standard rate 21%, accommodation rate 9%.
• Croatia — standard rate 25%, accommodation rate 13%.

Sabee's rate plans and folio configuration let you set the applicable VAT rate per property based on its actual location, with room charges taxed at the accommodation rate and extras (F&B, spa, transfers) taxed at the standard rate by default — configurable per property since not every country's reduced-rate scope is identical, and some extras (like breakfast bundled into a room rate) are frequently taxed at the accommodation rate rather than the standard one depending on local rules.

Tourist tax: a separate line, not a VAT sub-category

Tourist tax (sometimes called city tax, resort tax, or occupancy tax depending on the country and even the specific municipality) is a local government levy charged per guest per night, and it is not VAT — it should never be blended into your accommodation VAT calculation or presented as if it were a VAT component. Rates vary enormously even within a single country: a flat per-night fee in some German and Austrian cities, a percentage-of-rate model in parts of Italy and Spain that varies by municipality and even by property star-rating, and country-wide flat schemes in places like Croatia.

Sabee handles tourist tax as its own configurable line item per property — set as either a flat per-guest-per-night amount or a percentage of room rate, applied automatically to every folio and itemised separately on the guest invoice from the VAT line. Because municipal rates change and sometimes carry seasonal variation (several cities apply a higher tourist tax rate during peak season), this should be reviewed at least annually against your local municipality's current published rate, not assumed to be static from when it was first configured.

B2B reverse charge for OTA commission invoices

This is the VAT mechanic that trips up more independent hoteliers than any other: how VAT is handled on the commission invoice an OTA issues you, not on your own guest folios. Most major OTAs (Booking.com, Expedia and others) invoice hotel commission from an entity based in a specific EU country — commonly the Netherlands — and where the hotel and the OTA's invoicing entity are VAT-registered in different EU member states, the reverse charge mechanism typically applies: the OTA invoices commission without charging VAT, and the hotel self-assesses (declares) the VAT on its own return instead of paying it to the OTA.

Practically, this means your OTA commission invoices should generally arrive without VAT added, referencing your VAT registration number and the reverse-charge basis — and your own accounting needs to record the corresponding self-assessed VAT entry on both the input and output side of your VAT return. This nets out to no cash cost in most cases, but it must actually be recorded, since simply ignoring a reverse-charge invoice because "no VAT was charged" is a common filing error that shows up at audit. Sabee's accounting exports flag commission invoices for reverse-charge treatment based on the OTA's invoicing jurisdiction versus your property's, so this doesn't rely on someone remembering the rule manually every month.

Invoice numbering and sequencing

Nearly every EU country requires invoices to follow a continuous, gapless numbering sequence — no skipped numbers, no re-used numbers, and in most jurisdictions no ability to silently delete an issued invoice, only to void or credit-note it while keeping the original number in the sequence. This is one of the most common findings in a hotel VAT audit: a manually maintained spreadsheet or an under-configured system that allows a number to be reused after a booking cancellation, or resets numbering at the start of each year without the required annual-reset compliance the local rules demand.

Sabee generates invoice numbers automatically in a single continuous sequence per legal entity (or per property, if your properties are structured as separate legal entities), and a cancelled or refunded booking does not free up or reuse its original invoice number — it triggers a credit note referencing the original invoice instead, which is the correct approach in essentially every EU jurisdiction. If you're migrating historical invoices from a previous system, make sure the starting number in Sabee continues your existing sequence rather than restarting from 1, which is a detail worth confirming explicitly with your onboarding consultant during setup.

Handling refunds and credit notes correctly

A refund on a hotel folio should essentially never be handled by simply deleting or editing the original invoice — the correct approach across the EU is to issue a credit note that references the original invoice number, reversing the relevant VAT and net amounts, followed by a new invoice if a partial rebooking or adjusted charge applies. This preserves the audit trail: anyone reviewing your books later can see the original charge, the credit note that reversed it, and any replacement charge, rather than a silently altered original.

Sabee's folio and accounting module generates credit notes in this pattern automatically when a refund is processed through the system, keeping the VAT treatment consistent with the original invoice (same rate applied to the reversal as was applied originally, even if your standard rate has since changed) and maintaining the gapless numbering sequence described above. Processing refunds outside the system — a manual bank transfer with no corresponding credit note generated — is the most common way properties end up with books that don't reconcile at quarter-end, so it's worth making this the one refund path your finance-permission staff actually use.

Where this fits with staff permissions

Invoicing and refund authority is exactly the kind of access that should sit with a narrow, clearly defined finance role rather than being available to general front-desk staff — not because front-desk teams can't be trusted, but because a clean audit trail depends on refunds and credit notes flowing through a small number of accountable users. Our staff permissions audit guide covers how to scope finance access correctly, and it's worth reviewing alongside this one before your first VAT filing period on Sabee.

Multi-property VAT structures

Groups operating across more than one of the countries listed above face a further layer of complexity: each property typically needs to be treated as its own VAT-registered entity in its own jurisdiction, applying that country's accommodation rate and tourist-tax rules independently, even when the group's accounting and reporting are consolidated centrally. Sabee supports this by keeping VAT configuration, invoice numbering sequences and tourist-tax settings scoped per property, while still rolling the resulting figures up into consolidated group reporting for finance and ownership. Our multi-property rollout guide covers how permissions and reporting structure sit above individual properties more generally, and the same principle — property-level compliance, group-level visibility — applies directly to VAT.

Preparing for your first VAT filing period

Before your first filing period after switching to Sabee, run a short reconciliation rather than assuming the migration carried every historical figure across cleanly: confirm the opening invoice number matches where your previous system left off, spot-check a handful of folios across different rate types (a standard room charge, a charge including F&B extras, a reverse-charge OTA commission invoice) to confirm the correct rate was applied to each line, and confirm your tourist-tax configuration reflects your municipality's current published rate rather than a figure carried over from years earlier. This reconciliation typically takes under an hour and is far cheaper to do once, proactively, than to discover a systemic error only once your accountant is preparing the actual return.