Slovak tourism will get a boost next year. On Tuesday, October 23, Parliament passed legislation slashing VAT on accommodation services from 20 to 10 percent along with the introduction of recreational vouchers. Both measures will be effective as of January 1, 2019.
On the basis of positive experiences from other member countries of the European Union, it is assumed that the lower VAT and recreational vouchers would increase demand for accommodation services in Slovakia and thus propel further development of Slovak tourism. The respective legislation was authored by the minor coalition party SNS of Andrej Danko.
Provision of recreation vouchers to employees will be obligatory for companies and institutions with 49 and more employees. For companies and institutions with less employees, the vouchers would be voluntary under the same conditions and to the same extent, based on the adopted legislation.
The vouchers will work on a similar principle as meal vouchers. One voucher will be worth €500, from which the employer will cover 55 percent and the employee the remaining sum. Only employees working for a particular company for at least two years will be entitled to this benefit. It will be possible to use these vouchers only in Slovakia. The benefit will be exempt from income taxes.
Hotels welcome reduction of VAT as well as introduction of recreational vouchers. The Association of Hotels and Restaurants (AHRS) adds they have been calling for these measures for a very long time.
“Reduction of VAT is arriving literary at the very last moment because tourism would begin stagnating without support,” said Marek Harbuľák, general manager of AHRS, as cited by the TASR newswire. “The reasons are constantly growing costs and pressure of visitors on quality of services.”
Harbuľák specified that accommodation services are a demanding labour force while wages in this sector belong to the lowest of the Slovak economy in the long term. This was caused by the high tax burden.
“The increase of surcharges for work during night and weekends also increase wage costs,” said Harbuľák, adding that wage costs make up half of all costs.
Citing experiences from other European countries, he hopes that lower VAT would support creation of new work places, increase of wages and bring new investments not only in the hotel business but also in other touristic services.
“We believe that in a short period of time, we will persuade parliamentary deputies about the need to slash VAT on catering services, too,” said Harbuľák.