VAT is one of the taxes due in the Local Accommodation business.
Local accommodation is subject to this value added tax (VAT): 6% on the mainland, 5% if it is in Madeira and 4% if it is in the Azores archipelago.
Breakfast at the Guest House
When there is a meal service in the accommodation, VAT rates vary depending on how they are considered.
- Bed and breakfast: the reduced rate (6%) applies exclusively to the price of accommodation, including breakfast, if not subject to separate billing.
The main component of hospitality services is considered the accommodation of which breakfast can be an integral part if it is the object of a joint price, therefore, with accommodation being the main component of the service, the reduced rate (6%) is applicable to accommodation that includes breakfast billed together.
- Half board: the reduced rate (6%) applies to three quarters of the accommodation price and the intermediate rate of 13% to the rest (3/4 to 6% and ¼ to 13%).
- Full board: the reduced rate (6%) applies to half the price of the full board and the intermediate rate of 13% to the remaining half (half to 6% and half to 13%).
NOTE: Half board and full board are more common in hotels and hostels.
When breakfast is available to guests, but is not included in the price of the accommodation, a different VAT rate is applied.
Breakfast not included
When the accommodation does not include breakfast in the reservation amount:
- The reduced rate (6%) applies to the accommodation service;
- The buffet breakfast service is subject to the same rules as buffets with regard to the tax applied; a la carte breakfast service, products must be invoiced at the respective VAT rate, under penalty of the maximum rate being applied if the products have different rates.
When there is no consumption limit, billing is carried out by stipulating a fixed amount per person, regardless of the quality and quantity of the products consumed.
However, according to the legal rules in force, whenever services are provided subject to different rates of VAT, without differentiating the services to which each rate applies, the higher rate must be applied.
6% RATE
Accommodation in hotel-type establishments. The reduced rate applies exclusively to the price of accommodation, and also if breakfast is included in this price.
13% RATE
Provision of food and beverage services, excluding alcoholic beverages, soft drinks, juices, nectars and carbonated water or added carbon dioxide or other substances.
23% RATE
In practice, the provision of beverage services (except for unmodified waters) and the provision of various services, such as spa treatments, room rental, telephones, etc ...
