Tax and tourism

Taxation plays a critical role in shaping tourism competitiveness and business viability while the added value of intermediation is often poorly understood. The EU is at a disadvantage for three reasons: it taxes tourism exports, the price of holidays to non-EU destinations is VAT-free, and local taxes have increased significantly. Some European authorities are seeking to collect a tax on B2C sales of European product made outside the EU.

Tourism is especially sensitive to the cumulative impact of taxes. Analysis by the OECD in 2014 showed that higher tourism charges can reduce competitiveness. Visitors are price-sensitive and can easily choose alternative destinations, while businesses can relocate or invest elsewhere.

Reform is complex. For example, change in primary EU tax law requires unanimity among all member states. Local tourism taxes can be justified where revenues are clearly reinvested into infrastructure and services that benefit both residents and visitors. Without visible benefits, they risk undermining long-term competitiveness. Simplicity, transparency, and careful design are essential to avoid unnecessary administrative and cost burdens.

ETOA supports a tax framework that:

• Encourages value creation and strengthens Europe’s tourism exports
• Ensures reciprocity, where revenues fund services that benefit residents and visitors, including support for the green transition
• Is simple to comply with and avoids unnecessary complexity
• Is developed through meaningful consultation and introduced with sufficient notice (ideally 18–24 months)

A balanced and well-designed approach to taxation is essential to maintain Europe’s position as a leading global destination while supporting a sustainable and competitive tourism sector.