The Federal Fiscal Court in Munich (the Court of last resort within the German jurisdiction over tax and customs matters) did not release its grip on a high VAT rate when it ruled today that the full sales tax rate of 19 percent applies when rooms are used for commercial purposes, and “commercial purposes” includes places like “The Out Inn” (Okay, I made that up. It includes brothels such as the Eros Center in Düsseldorf owned by the plaintiff in the case, which rents out 13 “erotic rooms” equipped with jacuzzis to prostitutes on a daily or weekly basis, according to court documents, for up to 170 euros ($234) per day.)
The owners of brothels, like the plaintiff, were firm in their demand to use the same reduced VAT rate established for the hotel industry that was introduced in 2010. However, the court said such places were not established to foster tourism and must maintain the 19 percent tax rate. The ruling stated,
“From the location of the building in a red-light district it is clear that the plaintiff did not keep the premises for accommodation, but for the practice of prostitution.”
Prostitution has been legal in German since 2002 and includes anonymous, free and voluntary health testing available to everyone, including illegal immigrants. Many brothel operators require such tests. Eros centers can range from a house, an area or even a massive multistory complex (Pascha in Cologne, a 12-story building with some 120 prostitutes, over 80 employees several bars, nightclub, and up to 1000 customers per day) where women can rent a room for “commercial purposes,” to continue the verbiage of the court.
So, brothel owners’ attempt at such tax breaks landed them flat on their backs after the court ruling stiffed them of the lesser hotel tax rate, but it likely means more expense (and hopefully nothing more) passed along to the customers.
Who says the Harlem Shake phenom is over… here’s one I know I missed (SFW):