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Spanish hotels could be hit with “crippling” 10 per rise in VAT

Spanish hotels are being threatened with a massive 10 per cent rise in VAT as the country's government considers new austerity meaures.

Observers warn that such drastic action could “cripple” tourism, according to reports.

The current rate of VAT is 18 per cent, but hotel stays are subject to a rate of 8 per cent, and its finance ministry is assessing whether to bring them closer in line with its main VAT rate.

Spain is among the UK’s top touristr destinations and operators warned that any increase in VAT rates on hotel stays would severely damage the country’s tourism industry.

The Spanish Tourist Office refuse to commnt on the reports.

The VAT rate in the UK is 20 per cent, but the UK hospitality industry has been lobbying for a reduction to 5 per cent to allow it to compete with other European countries. That now looks like a forlorn hope.