MIL-OSI Translation: May 17, 2022 | Local overnight taxes in accommodation establishments compatible with the Basic Law


MIL OSI translation. Region: Germany/Germany –

Source: The Federal Constitutional Court press release no. 40/2022 of May 17, 2022 Decision of March 22, 2022 1 BvR 2868/15, 1 BvR 354/16, 1 BvR 2887/15, 1 BvR 2886/15

With a decision published today, the First Senate of the Federal Constitutional Court rejected four constitutional complaints relating to the levying of a tax on paid overnight stays in accommodation establishments (overnight tax) in the Free and Hanseatic City of Hamburg, in the Free Hanseatic City of Bremen and in the city of Freiburg im Breisgau. A large number of towns and municipalities has been levying an overnight stay tax on local accommodation providers since 2005, which usually amounts to a low percentage of the overnight stay price (net fee). The Federal Administrative Court ruled in a landmark judgment of 11 July 2012 – BVerwG 9 CN 1.11 – which is not the subject of the proceedings – that overnight stays arranged for work purposes should be exempt from tax for constitutional reasons. Since then, all overnight stay tax laws throughout Germany have exempted such overnight stays from taxation. The object of the constitutional complaints were decisions of the regular courts, which were based on the indirectly contested accommodation tax regulations. The First Senate has now decided that the regulations are compatible with the Basic Law. The federal states have enacted the laws on which taxation is based in accordance with their competence. The accommodation tax is a local expense tax within the meaning of Article 105 (2a) sentence 1 of the Basic Law, which is not similar to taxes regulated by federal law. In particular, the legislative powers of the federal states are not blocked by a similar federal tax. The accommodation tax regulations are also substantively compatible with the Basic Law. They do not place an excessive burden on the accommodation establishments concerned. The legislator can also exempt business-related overnight stays from expense taxation, but does not have to.

Facts: Since 2005, numerous cities and municipalities have introduced a tax on paid overnight stays in lodging establishments in the municipal area, citing Art. 105 (2a) sentence 1 GG. This so-called “accommodation tax”, “hotel tax” or “bed tax” (hereinafter: accommodation tax) usually amounts to a small percentage of the price of a business-related overnight stay (net payment) and is usually paid by the overnight guest (tax payer) when booking or of registration at the accommodation facility. The tax debtor is the respective accommodation facility. He pays the overnight stay taxes to the tax office. All of the complainants are lodging establishments. Your complaints are directed against the levying of accommodation taxes in Hamburg, Bremen and the city of Freiburg im Breisgau. The complainants to II. and III. turn against tax returns and against decisions on their objections against them. Like the first complainant, they are also opposing court decisions on tax returns that are based on state laws they consider to be unconstitutional. The complainant to IV objects to a municipal tax statute that allows the levying of an overnight stay tax. In addition to a violation of the regulations against the legislative competence for expenditure tax according to Art. 105.2a sentence 1 GG, the complainants complain in particular of a violation of their professional freedom under Art. 12.1 GG, their property freedom of action under Art. 2.1 GG and their fundamental right to equality from Art. 3 para. 1 GG.Key considerations of the Senate:The constitutional complaints are unsuccessful.I. The court judgments and the norms on which they are based do interfere with the general freedom of action of the complainants in the area of ​​property law under Art. 2 (1) GG and in their freedom to practice their profession under Art. 12 (1) GG. However, these interventions are justified.II. The federal states have enacted the laws on which taxation is based in accordance with their competence. The disputed overnight stay taxes are local expense taxes within the meaning of Article 105 (2a) sentence 1 of the Basic Law, which are not of the same kind as taxes regulated by federal law.1. The subject of expenditure tax within the meaning of Art. 105 Para. 2a Sentence 1 GG is the use of income for personal living needs. An expenditure is considered to be an externally recognizable consumption for which financial means are used and which is typically an expression and indicator of economic performance, regardless of who finances this consumption and with what means and what purposes it serves. The Hamburg culture and tourism tax, the Bremen tourism tax and the Freiburg accommodation tax are therefore expenditure taxes. The subject of the tax is the expense of the accommodation guest for the possibility of a paid overnight stay in an accommodation facility. This expense incurred by the overnight guests is charged to the accommodation establishments as the tax debtor (indirect tax collection). The overnight stay tax is thus designed to be passed on to consumers.2. The taxes at issue here are not similar to sales tax or any other federally regulated tax. The ban on similarity in Art. 105 (2a) sentence 1 GG restricts the tax invention right of the federal states, which is linked to their exclusive power to legislate on local consumption and expense taxes. In order to assess the similarity, it is important to take an overall look at the specific design of an expense tax on the one hand and possibly similar federal taxes on the other. This does not involve a far-reaching blocking effect on the taxation rights of the federal states and local authorities. The overnight stay taxes at issue are neither area-type sales taxes at state or municipal level, nor has the expense of a paid overnight stay in an accommodation facility been covered by a special federal tax. Accordingly, there is no blocking effect on the legislative power of the federal states.3. In the specific case, exercising the tax legislation competence of Art. 105 (2a) sentence 1 GG does not violate the limits of the exercise of competence under the rule of law and at the federal level. The challenged tax regulations do not violate the principle of the freedom from contradiction of the legal system, because they have no steering effect and therefore cannot interfere with the substantive legislative competence of the federal legislature from the outset. They also do not violate the principle of loyalty to the federal government because the state legislatures have not abused their legislative competence.III. Lodging taxes are also substantively constitutional. In Hamburg and Bremen, taxation is based on state law, in Freiburg on a statute that is itself based on state law. The encroachment on Art. 2 Para. 1 GG is just as justified as the duties associated with tax collection in the taxation procedure, which concern fundamental rights under Art. 12 Para. 1 GG.1. The encroachment on Article 2(1) GG associated with the taxation is justified because the design of the accommodation tax regulations meets the requirements of the fundamental right to equality (Article 3(1) GG) and does not place a disproportionate burden on the complainants Tax debtors do not violate the principle of fair burden sharing. The indirect collection of overnight stay taxes from the accommodation establishments is understandable in the sense of an equal tax collection and is not arbitrary. The accommodation establishments have a special legal and economic relationship to the tax object, because they make a significant contribution to the realization of the tax-related fact of the overnight stay. The overnight stay tax is also designed to be passed on. The complainants can easily collect the overnight stay tax from overnight guests who stay overnight for non-professional reasons. b) The exemptions from taxation for professional overnight stays are also compatible with the fundamental right to equality (Article 3(1) of the Basic Law). The exceptions relate to deviations from the tax burden decision once made with the choice of the tax object “overnight stays in accommodation establishments against payment”, which in turn are to be measured against the principle of equality. According to this, a standard-giver can choose the professional reason as a starting point for a differentiation in the taxation of expenses and exempt overnight stays that are mandatory for the exercise of the profession from the taxation, for example to serve (local) economic development. However, the legislature is not constitutionally forced to refrain from taxing business-related overnight stays.c) The challenged provisions also do not suffer from a structural deficit in collection and enforcement that is incompatible with Article 3.1 of the Basic Law. In view of the provisions on proof, liability and sanctions, it is not apparent that the factual difficulties in collection that result from the tax exemption for overnight stays that are mandatory for professional reasons are laid out in the contested regulations in such a way that the law would be contradictory to ineffectiveness.2. The encroachment on the complainants’ professional freedom under Article 12(1) of the Basic Law by employing them as paying agents for the accommodation tax is also justified. A provision on the person liable to pay the tax, which is less burdensome for the complainants, does not represent an equally suitable means, since liability as a tax debtor is obviously more effective for enforcing the tax obligation. A direct survey of overnight guests would not be practicable. Overall, it is reasonable for the complainants to enable the tax collection through their participation. Due to the obligations, in particular for tax registration and the payment of the tax, they incur an additional expense that is solely owed to the overnight stay tax. However, these additional obligations in the taxation procedure represent a typical company activity that does not go beyond the similar burdens of the registration law and sales tax law.


EDITOR’S NOTE: This article is a translation. Apologies should the grammar and/or sentence structure not be perfect.

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