In this particular appeal to the Dispute Resolution Directorate (DRD), we have the case of a hotel which provided free rooms and accommodation services exclusively to its associates (professionals-agents), as part of contractual relationships with them. The purpose was to inspect and certify the infrastructure and services offered, in order to make corresponding recommendations to potential customers for choosing this particular hotel. Therefore, these acts constitute a means of facilitating the corporate purpose of the appellant, as they aim at promoting its business and contribute directly and decisively to the performance of taxable transactions. However, the administration rejected the claim and did not accept the hospitality expenses as the law stipulates, regardless of the purpose or the persons hosted. Therefore, it considered the provision of free accommodation as a taxable act, and even at the value at which the room is invoiced.

As “normal value”, is considered the total amount which the person acquiring goods or receiving services would have had to pay at the time of the respective delivery or provision to an independent supplier of goods or service provider in the country, under conditions of full competition, in order to acquire the said good or service.

However, we are talking about the normal value of an overnight stay, as we have also emphasized.

To verify the correctness of the calculation of the free overnight stays, the inspection sought the average price per night charged by the business each month, as determined from the books kept, for the stays that were invoiced normally and under conditions of full competition, in the tax year under review. Simultaneously, it determined the number of free overnight stays by subtracting the number of invoiced stays from the total number of stays, as these are derived from the supplementary books kept by the business.

Then, the inspection proceeded to determine the value of the free accommodations at the hotel by multiplying their number by the average price per night.

It should also be emphasized here that there is a 2021 decision of the DRD which shows us the way to calculate the value on which VAT will be calculated in case of self-use or free provision of hotel services. Therefore, we cannot easily have different claims.

In conclusion, it should be said that when free accommodation services are provided in a hotel, the value on which the special self-supply document must be issued and VAT paid is the normal value of an overnight stay. Otherwise, in the event of an inspection, differences and surcharges will be attributed to us.


Article written by Christos Triantafyllopoulos, Founder & CEO of Aegean Consulting

The above text is for informational purposes only and it does not substitute specialized advice

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