Britain’s restaurants and hotel accommodation continue to face a standard VAT rate of 20 per cent.

A look at how other European nations approach this reveals the extent of taxation in the UK hospitality industry.

Several neighbouring countries have been reducing the rates applied to their hospitality sectors.

Luxembourg has Europe’s most favourable hospitality tax rate, sitting at just three per cent and covering both accommodation and restaurant services, though alcoholic drinks are excluded.

Switzerland follows with a dedicated accommodation rate of 3.8 per cent specifically for hotel stays. Malta charges seven per cent for hotels and tourism-related services.

Germany, which has Europe’s largest economy and ranks third globally, has brought back a seven per cent rate for restaurants and catering services.

France applies a 10 per cent rate for hotel stays, campsites and furnished holiday rentals. Diners in restaurants, cafés and bars also pay 10 per cent. Neighbouring Italy mirrors this with a 10 per cent rate for hotels, restaurants and cafés.

Amid global economic stagnation, even Ireland has moved to reduce its hospitality tax. The Irish rate will fall from 13.5 per cent to nine per cent for meals and catering from July 1, 2026.

Many Britons head to Spain or Portugal for sunshine breaks. On the Spanish mainland and Balearic Islands, all hotel accommodation and restaurant services including alcoholic beverages in bars and cafés face a 10 per cent tax rate.

The typical cost of a pint of beer in Madrid and Barcelona was €3.50 in 2025, equating to approximately £3 in British currency. In certain areas of Spain, this dropped to just £1.75 per pint.

Portugal charges 13 per cent on restaurant food and certain beverages, though accommodation attracts only six per cent.

In Britain, the hospitality sector ranks among the most heavily taxed in Europe. Yet questions remain about whether this must continue.

During the coronavirus pandemic, VAT was reduced to five per cent from July 2020 to September 2021. Following this period, it only climbed to 12.5 per cent until March 2022, before returning to 20 per cent.

Circumstances are once again proving difficult.

Increases in wages, national insurance contributions, business rates and utility costs are placing significant pressure on hospitality businesses. Wales is also set to introduce a tourism tax next year, pending individual council approval.

A reduction in VAT is urgently required.

Mike Enea is a Conservative campaigner and blogger.