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commission on VAT and Taxes

Why is commission charged on rates, VAT included, but city tax excluded ?

27 Replies

7
pibomarco

I don't understand your question.

1 year ago
2
Boss of the Ho…

i wondered why bookingdotcom charges commission on the total amount, vat inclusive

so we pay commission on the vat !

But not on city/tourist tax

1 year ago
7
pibomarco

I think you also pay a commission on city tax when it's included in the rate.

1 year ago
2
Jkangarloo

You may have to speak to you booking.com about this. Here in Canada, I'm able to have the sales tax AND the tourist calculated after the room rate, and so we only pay commission on the room rate. Under the 'Property' tab in your extranet, there is a section for VAT/Tax/Charges. You should be able to see whether or not the VAT settings are correct, but you will need to contact them if you want to make any adjustments.

1 year ago
5
David

In the UK the rate shown must be fully inclusive of VAT If you are VAT registered,Seems unfair though that you are paying commission on 20% tax.

1 year ago
2
Boss of the Ho…

seems we are with the happy bunch, only 6% VAT in Belgium on hotelrooms

1 year ago
7
pibomarco

20% damn.. was that after BREXIT? xD
9,5% VAT in Slovenia.

did anyone contact booking.com regarding this "unfair" issue?

1 year ago
5
David

20% VAT in the UK on everything, the government say to make exceptions for certain sectors would be unfair.

1 year ago
7
pibomarco

We have 22% VAT on everything else... Hotels, food,.. 9,5%.. hope it will stay this way. :)

1 year ago
1
Michebli

Dear all,

please note that we pay 11% VAT on hotel bookings.

This changed in the beginning of 2018 (from 10 to 11%). I then decided to change the rate from tax inclusive to tax exclusive.

I then discovered/noticed that booking.com has been charging us for the 2 last years (when we began operating/working with booking.com) the 15% commission on the VAT. I sent a claim and after they accepted to refund the amount, our account manager got back to us saying it was not possible.

This happened about 2 months ago and we have (since) stopped paying the commission invoices following this very unprofessional answer.

If you have similar experience or have sent a claim please let us know.

Best regards,

Michel

1 year ago
1
Stay

This is an issue that many hotels ask about. In practice hotels don't loose out as the commission paid to booking.com on the VAT amount is deducted as an expense from gross income. However local governments are loosing out on income tax because this deduction from gross income lowers the hotels nett profit resulting in lower income tax paid at the end of the tax year. Booking.com should really only be charging commission on the nett room rate excluding the VAT.

I personally prefer that booking.com gets this money and things stay the same because I get much better value from booking.com for the commission I pay to them than I get out of my local government for all the taxes I pay to them but then I live in Italy so that's another story !!!!

1 year ago
7
pibomarco

Exclude VAT from the rate and it won't be commissioned.

1 year ago
1
Stay

We can't exclude VAT on booking.com prices in Italy as there is no option on our extra net for that and the booking.com website also specifically states that VAT is included in the price that the guest books at. It only states that the tourist tax is excluded from the listed rates. Yes tourists visiting Italy also pay a tourist tax on their nightly stay on top of VAT and the joke is that it's supposed to be used for improving tourist services. I say "joke" because when a tourist visits our local tourist office and ask for map of the walking routes in the area they give him/her a scrappy little map and charge him 2€ for. Tourist tax was reintroduced a few years ago in Italy but we as hoteliers have not seen any improved facilities for tourists in any of the local councils.

1 year ago
7
pibomarco

I also don't have an option in extranet, as for the city tax. (for which is excluded in my first property and included in the second property - by my request).
I think if you make a request to BC.com they will exclude it.

As far as I know excluded services are not commissioned. So it was in the past, not sure how is it now, but I think it's the same.

1 year ago
1
Stay

ok thank you for your suggestion I will try that and see what they say. I will then post details on this blog for others. Hopefully it will be possible.

1 year ago
2
Boss of the Ho…

Likewise, it is an option to offer rates breakfast excluded. It gives you an exta competitive rate (as guests dont know what they book) and you pay less commission ;-)

1 year ago
1
Stay

Ok so booking.com does give property owners the option of excluding VAT just by asking them to indicate this for ones property but it involves a lot of work when you use a Chanel Manager and you have to list booking.com rates different to other OTA's that may not have this option. They probably all do have this option but the other problem that arises is that guests feel a bit cheated when they come to pay the bill as they never read the small print and expect VAT to be included in the listed price. This es especially so in Europe where the price shown generally always includes VAT.

I have asked booking.com now if they can invoice me for their commission at the end of each month on the total revenue excluding VAT. I am waiting for their answer. Legally I think they should not be earning commission on the VAT part of the guest's bill as local travel agents in my country have to deduct VAT off first before they bill us for commission. If this is the case then booking.com and many other OTA's will have to also refund the commission on the VAT part of the guest's bill to all property owners worldwide. This would be quite a hefty bill for them as it's been going on for years now.

Let's see what the outcome will be from my enquiries.

1 year ago
7
pibomarco

In chanel Manager you can set decrease/increase a fixed amount or % per each booking chanel. So it should not be a big deal.
Sure this is the down side.. Noone wants to see extra charges at the check-out, specially those who are sloppy at reading the property description.
VAT is not calculated as city tax at the total amount when guest makes a booking? It is just mentioned in the Fine print that VAT is excluded?

I think you wont get far with your request I guess. That is why you are able to exclude VAT from the rate. It is how it is.. it's easier to accept, or you should get at least a legal advice.. but I think they already are aware of this and are somehow secured by their law regarding this matter
Quite a few OTA's also charges the commission for the total amount where VAT is included as far as I know.

1 year ago
1
Stay

Thanks for your help once again. Yes that should make it easier t do on my channel manager but as you agree no one wants to see extra charges at check out and it does not bode well on reviews. I have still not had a reply from booking.com as to excluding VAT on end of months commission so will post that when and if I do get it. I have asked out local provincial hotel board for their opinion on this and they agree that the commission should just be charged on the net amount with VAT. They are now taking it to the Italian national Hotel board for their opinion so we might get somewhere.

I've been in the hotel business for 40 years now and yes I agree it is easier to sometimes just accept how it is but I think one should always try to the best of their ability to change things for the better. Keeping to this philosophy I am often surprised how things change to how one wants them to be....maybe it's all just an illusion but that's another topic much too complicated to go into.

1 year ago
7
pibomarco

I of course agree with all that... But after 10 years working with Booking.com I am not motivated anymore.. It's easier for me and for my "health" just to accept their rules/system as it is. Peace with BC was needed after all the issues I had with them. Because of me they won't make changes any soon. I know how it was in early years working with BC that is why I don't have many complaints now because they improved a lot since then. Basicly I almost hated them at the beginning battling for features that are now available. :)

1 year ago
1
Stay

I know exactly what you mean I was too one of the first hotels to join them many years ago. It got so bad I cancelled my contract with them at the time for almost 2 years then they woke up and starting listening to property owners. Now I believe they are one of the best to work with and it shows in their success. Others like Expedia and all the OTA websites affiliated like Trip Adviser are still way behind not to mention the worst but by no means unsuccessful OTA to work with, Airbnb. Why don't they wake up and realise the potential they have to be bigger than booking.com if they just made a more efficient extra net website for property owners.

Good chatting to you.

1 year ago
7
pibomarco

Expedia is my least favourite (extranet)... The worst HRS.com.
AirBnB is waking up for proffesional hosts/hoteliers.
Chanel manager that I use is just implementing my property for a two-way integration (beta phase) with AirBnB. So basicly, rates, minimum stay, adding more units to one listing etc will be managed via chanel manager, so I expect to have more bookings.. They are getting there for sure.

1 year ago
1
Stay

AirBnB can be integrated with a Chanel manager ?

That is news as I can't see the possibility on their extranet. I will ask my Chanel manager provider if they can also connect but how will you get round their cancellation policy of having to refund guests if they cancel just 14 days before arrival for their strictest policy and one still has to refund 50%. They have modified this quite recently as it was at least 30 days and it was 100% cancellation conditions. Maybe that does not effect you. I know they have a super strict 3 day and 60 day cancellation policy as well but one has to be invited which seems really ridiculous.

1 year ago
7
pibomarco

AirbnB is possible to integrate with a chanel manager (sync calendars). But only for the availabilty. Rates, minimum stay could not be updated via chanel manager, it has to be done via AirBnB extranet. When you receive a booking from AirBnB, chanel manager closes the availabilty.
But you can only add one unit per listing/room category.
I think there are only few chanel managers that at the moment offer 2-way integration for proffesional hosts/hoteliers.
Regarding the policy.. On booking.com my policy is: No free cancelation. If canceled first night is charged, if canceled after 30 days before the arrival the total amount is charged.
On AirBnB i have a strict cancelation policy, had quite a lot of bookings and basicly no cancelations. Also I never had a bad experiance with AirBnB guests, that is why I hope that a two-way integration will be implemented soon, so that I can receive more bookings. I have 7 listings on AirbnB our of 20 available to sell.

1 year ago
1
Kata Kovacs

Stay, I am really interesting if you made the changes at your property or not. Is the VAt included in your rates?

7 months ago
1
Stay

No I'm afraid I've not made any changes and VAT is still included in my rates as it would not be transparent to guest that the price advertised is exclusive of VAT. Here in Italy & most of Europe all prices listed to the end user include VAT. Booking.com could easily deduct the VAT of the monthly total of reservations they send us and then apply their commission on the net value but they conveniently choose not to as it amounts to a lot of money specially when you multiply it by millions of properties.

Unless they see for themselves how dishonest it is they won't change and we will have to continue to pay them commission on the VAT portion of our sales.

7 months ago