In Czech Republic, Prague in particular it is very common for hoteliers to waive City Tax 15,- CZK fee per person per night. They usually pay City Tax to the government themselves based on the total number of spent nights by Leisure travelers. However if hoteliers waive this tax, and consider it part of the rate, the hotel is paying 15% VAT on this amount of 15 CZK, which in 1 case is minimal, but if you add up all bookings for the year, this is a significant amount.
To resolve this we came up the following solution that helps hotels to make a correction of the rate by the amount of the city tax (to correct the VAT) and re-post that same amount of city tax on the bill at a 0% VAT.
How does it work?
- Firstly we discount the rate by 15 CZK per person per night. This discount is a correction of the revenue charged at 15% VAT
- Secondly, we post the City Tax amount of 15,- CZK per person per night with 0% VAT, note that this is only done for guests where you select the "leisure" business segment
The result of this action is that you save 2,25 CZK (15% of 15CZK) per each room night in taxes.