Accounting for VAT for Hotel Bookings via Expedia

Expedia are based in Switzerland, guests pay them directly

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We've started using Expedia in a hotel. Guests book through the Expedia website and pay directly. Expedia take their commission (18%) and every month send us a net payment.

I've tried googling but can't find a clear answer on how the hotel accounts for any VAT. It looks as though most hotels won't give VAT invoices to guests for bookings paid for on Expedia, so does this mean that they don't account for sales VAT? And if they are paying it over to HMRC, I don't understand the reluctance to show this on an invoice.

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By DKB-Sheffield
08th Apr 2022 23:18

It's been some time since I've dealt with hotels so I can't comment on the current contractual arrangements with various TPIs. However, as an ex-hotel FC, there are/ were two kinds of 'agents'...

- 'Introduction' (only) booking agents. The customer booked through the TPI but, the contract was between the hotel and customer. The agent charged a commission directly to the hotel. The customer paid - in full - on checkout. Whilst 'deposits' were often taken, this was merely the agent taking the card details for the hotel to take a deposit (or pre-auth the card)

- 'Full' booking agents. The customer booked, and paid, the TPI (in full). The customer's contract was with the 'agent' (who was actually acting as principal). The TPI then booked the room, were invoiced by the hotel -following the stay - and paid less their commission. The hotel was actually contractually bound to NOT provide the guest with the room bill (only 'extras') as it was not their bill to have!

I can't help with the specifics of the Expedia contract (I was around in th days of Superbreak (principal) and Hogg Robinson (booking agent). However, based purely on your explanation, I would (merely) suggest the contract is between Expedia and the hotel - with Expedia acting as principal - that being the reason for guests not being provided with VAT invoices from the hotel. However, without sight of the contract, I'm otherwise in the dark.

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By jndavs
09th Apr 2022 00:55

I thought it was dealt with under TOMS
Their T&Cs say this:

Article 5. Financial conditions and payment procedures

5.1 Local taxes and payments

Unless specified otherwise in the Rules and Restrictions, the prices of the Services shown on the Website are expressed in GBP, excluding local taxes imposed by the authorities in some countries.

The reservation of any pre-paid "pay now" accommodation bookings, Expedia Special Fare products and Package Holidays for destinations within the European Union is covered by the regulations for travel agents and tour operators, as set down in Articles 306-310 of the EU Principal VAT Directive [2006/112/EC]. Expedia Travel is located in the United States of America, as a result of which no VAT will be charged on services provided by Expedia Travel.

5.2 Tax recovery charge

Except as provided below with respect to tax obligations on the amounts we retain for our services, we do not collect taxes for remittance to the applicable taxing authorities. The tax recovery charges on prepaid "pay now" accommodation bookings are a recovery of the estimated transaction taxes (e.g. sales and use, occupancy, room tax, excise tax, value added tax, etc.) that Expedia Travel pays to the property for taxes due on the rental of the room for those transactions where Expedia Travel makes the Service directly available to the Customer. The property invoices Expedia Travel for tax amounts. The properties are responsible for remitting applicable taxes to the applicable taxing jurisdictions. Expedia, Inc. does not act as co-vendor with the property with whom our customers book or reserve their travel arrangements. Taxability and the appropriate tax rate vary greatly by location. The actual tax amounts paid by Expedia Travel to the properties may vary from the tax recovery charge amounts, depending upon the rates, taxability, etc. in effect at the time of the actual use of the accommodation by our Customers. In addition to the above, in certain jurisdictions, sales, use and/or local hotel occupancy taxes may be imposed on the amounts that Expedia Travel charges for its services. The actual tax amounts on our services, if any, may vary depending on the rates in effect at the time of your accommodation stay.

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By JaneS
09th Apr 2022 07:51

Thank you for these replies, I'll digest them shortly. Just a correction from the OP though - we wouldn't get a monthly payment from Expedia, they provide a "virtual" credit card number that we charge when the guest stays. Also Expedia are based in the USA, not Switzerland. Apologies for the wrong information. I'm not sure if this changes anything.

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Replying to JaneS:
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By DKB-Sheffield
09th Apr 2022 22:15

IF, you act for the hotel...

The use of prepaid virtual cards is (and was) commonplace. It saved the 'agent' dealing with purchase ledgers and, the hotel actually benefited from quicker settlement. It also avoided (from a practical perspective) staff errors (charging items to the agent that were not included - avoiding high levels of write off).

Your suggestion of the use of prepaid cards (which would be one-time-only, fixed amount, time limited) would suggest the value of the agreed rate is lower than the guest has been charged by Expedia. Superbreak used to pay a preferential rate of (e.g.) £50 for a room but charged the guest (e.g.) £80 (their commission being the difference between their charges and the 'preferential rate'). You certainly should not give the guest Expedia's bill, or allow them to know the rate paid to Expedia (I'd expect, very much, this will be in the TPI agreement!).

As for whether Expedia is in Switzerland, US, UK, or anywhere else, the VAT charged by the hotel will be the underlying rate (pre and post 31 March). The place of supply of the accommodation (by the hotel) is the location of that establishment.

IF you don't act for the hotel... and instead act for a client purchasing hotel accommodation, please ignore the above!

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By Jason Croke
09th Apr 2022 16:53

As others have posted, this likely falls under TOMS.

The Swiss hotel will charge Swiss VAT and pay it over to the Swiss taxman, but will not show it on their invoice to you, there is no VAT to be reclaimed by you.

Downside of booking via an agent like Expedia, if booked direct with hotel, you would be charged Swiss VAT and see it as a separate line on the invoice and you could then apply to the Swiss taxman to try and get it back.

You cannot reclaim foreign VAT on a UK VAT return.

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By Paul Crowley
09th Apr 2022 18:51

Best to ask questions before signing up

Still same could be said for your commecial clients
No claim to input tax without a valid VAT invoice from a UK supplier

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By DKB-Sheffield
09th Apr 2022 22:00

Hi Jane

Having just read Jason's response, I realise I may have misread your original question. I thought you acted for the hotel not on behalf of the 'guest'.

Jason's response is - of course - correct. My response was from the perspective of the actual accommodation provider (the hotel) which is therefore, more likely a red herring!

I'll provide an answer to your add-on query, in case you are acting for the hotel.

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