In the construction sector in particular, foreign workers from countries such as Poland or Hungary are often employed. If, as an employer, you provide accommodation for these workers, the VAT on this is not deductible.
BUA
The fact that VAT on accommodation costs is not deductible for the employer follows from the Decree on the Exclusion of VAT Deductions (BUA). According to this Decree, items used for the personal purposes of staff are not deductible. Accommodation is listed as one of these items.
Please note! The type of accommodation is also irrelevant. In a case In the case that recently came before the court, hotels, guesthouses and holiday homes were used, but this was irrelevant.
Company interest?
In the case in question, the court ruled that the existence of a business interest was irrelevant. Accommodation was necessary in the case in question because the employees concerned had not been employed long enough to move house (they were agency workers) and the journey to their homes abroad was too long.
Accommodation costs
The question now is where exactly the line is drawn. An employer who pays for a hotel room for an employee who has to give a presentation early in the morning far from home is not providing accommodation for that employee. The VAT charged on the hotel room is, however, deductible. But does this also apply to engineers who stay in a holiday park during the week so as not to have to drive long distances back and forth every day?
Moving costs may sometimes be tax-deductible
In a previous court case, the Supreme Court ruled that, under certain circumstances, VAT on removal costs may be deductible for the employer. The decisive factor is whether the employee can, in the interests of the business, opt out of the relocation. If this is not the case, the VAT is deductible. As accommodation is explicitly mentioned in the BUA, this does not apply to VAT on accommodation costs.