Tax for the promotion and advancement of culture - Frequently asked questions

 The legal basis for the tax is the Satzung zur Erhebung einer Kulturförderabgabe im Gebiet der Stadt Köln [Statute on Charging a Tax for the Promotion and Advancement of Culture in the City of Cologne] of 18 Nov. 2014 (shortly referred to as: KFA-Satzung) in 1st Amendment of 16 December 2015. The KFA-Satzung was published in the Amtsblatt [Municipal Gazette] of the City of Cologne, no. 48, of 19 Nov. 2014, page 997 et seq. and applies to all accommodation services rendered for consideration after 30 November 2014.

The 1st Amendment to the statutes of 16.12.2015 was published in the Amtsblatt [Municipal Gazette] of the City of Cologne, No. 54 of 23.12.2015. The new regulations contained therein are applicable vom 01.01.2016.

The Statute itself is based on Sec. 105 (2) a of the Grundgesetz [German Constitution] (GG) in conjunction with Sec. 7 of the Gemeindeordnung [Municipal Code] (GO) and Sec. 2 of the Kommunalabgabengesetz für das Land Nordrhein-Westfalen [Local Tax Act for the Federal State of North Rhine-Westphalia] (KAG). The tax for the promotion and advancement of culture is levied as a direct local expenditure tax.

By levying the tax for the promotion and advancement of culture, a tax is charged on the expenditure of the guest for being given the option to be accommodated in an accommodation facility (hotel, inn, boarding house, private room, hostel, holiday apartment, motel and on campsites, boats and similar facilities).

The tax is only levied on accommodation charges exceeding the basic need of being accommodated. For example, accommodations in a hotel necessary to avoid homelessness are exempted from the tax. The expenses for accommodation will not be liable to the tax when accommodation is necessary for work-related mandatory reasons. This may be the case when the commercial/industrial or freelance profession cannot be performed and therefore income cannot be gained without the accommodation (work-related mandatory accommodation).

The overnight guest is liable for paying the tax.

The operator of the accommodation facility is the person liable to forward the tax to the city, i.e. they must collect the tax for the promotion and advancement of culture from the overnight guest and subsequently forward it to the City of Cologne on the basis of a notice of tax assessment, unless the overnight guest declares in a legally binding manner that the accommodation is necessary for work-related mandatory reasons (see also sec. 9 “Will the tax for the promotion and advancement of culture also be charged to overnight stays of business travellers?“).

If the person liable to pay the tax (Hotelier) does not sufficiently fulfil his obligations to collect and pay the tax for the promotion and advancement of culture and to provide evidence thereof, he may be held liable in addition to the person that is liable to pay the tax (Guest).

The tax rate is 5 percent of the amount paid by the guest for the accommodation, including value added tax (however excluding the tax for the promotion and advancement of culture).

Example

Catering services and other services associated with the accommodation (for example minibar consumption, web usage, surcharge for pets) must not be included when determining the expenditure for accommodation.

All questions concerning value added tax can only be dealt with between the company and the tax authorities.

As the individual guest is liable to pay the tax for the promotion and advancement of culture, the accommodation charge must be allocated to the individual persons. That is important for example if a family is travelling together, although only one member of the family must come to Cologne for work-related mandatory reasons.

Basis for the calculation of the tax is a tax declaration which the person liable to forward the tax (hotel business) must file until the 15th day after the end of a calendar quarter in form of an officially prescribed form (Appendix 1 of the Statute).
A notice will be issued after completion of the tax declaration procedure. The assessed tax for the promotion and advancement of culture must then be paid to the Stadtkasse Köln [Treasury of the City of Cologne] within seven calendar days after it has been notified. The assessment period is the calendar quarter as specified in the provisions of the Statute.

The official form for the declaration on the tax for the promotion and advancement of culture is available for download on the internet presentation of the City of Cologne under the following link:

In accordance with the decision of the Bundesverwaltungsgericht [Federal Administrative Court] of 11 July 2012 on the statutes on charging a tax for the promotion and advancement issued by the cities of Bingen and Trier, that tax may not be levied on overnight stays of business travellers if they are necessary for work-related mandatory reasons.

This may be the case when the commercial/industrial or freelance profession cannot be performed and therefore income cannot be gained without the accommodation (work-related mandatory accommodation).

An accommodation is, for example, necessary for work-related mandatory reasons, if the place of residence of the guest is located in such a distance from the workplace that a daily commute seems unreasonable or if their presence in the City of Cologne is inevitable for their professional activities.

By completing the official form     

Appendix 2 of the KFA-Satzung

the guest declares that the accommodation is necessary for work-related mandatory reasons.

Employed persons must attach a certificate issued by their employer to the official form (Appendix 2); this employer’s certification may also be issued on the official form, by stating the name and address of the company and by attaching a signature and the company stamp if available.

Further options for issuing a confirmation certificate from the employer can be found under point 11.1.

The various options are also listed on page 2 of the official declaration form.

Note: The previous forms for dependent employees (Appendix 2 of the KFA (tax for the promotion and advancement of culture) Statutes) and for tradespeople / freelancers (Appendix 3 of the KFA Statutes), have been merged into one single form (Appendix 2 of the KFA Statutes) and have been editorially revised. The disclosures regarding identification number, issuing authority and nationality are no longer required. Tradespeople and freelancers must now indicate their VAT identification number or the tax office responsible for their income tax instead of their tax identification number.

The relevant forms can be downloaded below:

In accordance with the case law of the Oberverwaltungsgericht Nordrhein-Westfalen [Higher Administrative Court of North Rhine-Westphalia], the guest and not the operator of the hotel is the person liable to pay the tax in North Rhine-Westphalia, in contrast to the legal situation in other federal states. Accordingly, the guest, being the person liable to pay the tax, must file the relevant tax declaration evidencing that their accommodation is not liable for the tax.
They may make this declaration on a voluntary basis, but it is necessary to avoid payment of the tax for the promotion and advancement of culture. The guest needs to provide personal data, such as e.g. their date of birth or ID number, to ensure a unique identification of the tax debtor. This information is required to validate the declaration and to be able to initiate the necessary steps in case of an incorrect declaration.

Note: The previous forms for dependent employees (Appendix 2 of the KFA (tax for the promotion and advancement of culture) Statutes) and for tradespeople / freelancers (Appendix 3 of the KFA Statutes), have been merged into one single form (Appendix 2 of the KFA Statutes) and have been editorially revised. The disclosures regarding identification number, issuing authority and nationality are no longer required. Tradespeople and freelancers must now indicate their VAT identification number or the tax office responsible for their income tax instead of their tax identification number.

No, an official form is not available. The certificate must be made in writing, state the name and address of the company (letter head or company stamp) and must contain a signature. The certificate must state that the accommodation in Cologne is or was necessary for work-related mandatory reasons.

In what language must the employer’s certificate be issued?
The employer’s certificate must be issued in German as it forms part of the taxation process.

Is a digital signature acceptable?
No, a handwritten signature is mandatory.

May the employer’s certificate be sent by fax?
The employer’s certificate may also be sent by fax.

To whom must the employer’s certificate be sent? 
The employer’s certificate is part of the guest’s tax declaration. It must normally be provided to the accommodation facility, together with the tax declaration to be retained as part of the booking process. Only if all of these conditions are met, will no tax for the promotion and advancement of culture be charged to the guest.If the tax declaration and the employer’s certificate are not provided to the accommodation facility, it is also possible to file an application for refund of the tax for the promotion and advancement of culture with the City of Cologne, by submitting the tax declaration and the employer’s certificate (Art. 11 of the KFA-Satzung).

Must an employer’s certificate be issued for each staff member? 
Yes, the employer’s certificate must, as a rule, only relate to one employee, because it forms part of that person’s tax declaration.

Is there a simplified procedure in place for presenting certificates for tour groups?
Yes. For reasons of simplicity, employers may, as an exception, issue a summary certificate for participants of tour groups whose accommodation is clearly made for work-related mandatory reasons. That certificate must state the names of the participants and the reason for their stay. Each page of the certificate must contain the declaration that the accommodation is necessary for work-related mandatory reasons and the legally binding signature of the employer.Irrespective thereof, the individual guest, being the person liable to pay the tax, must complete the official form and thereby declare that the accommodation is necessary for work-related mandatory reasons (see in particular Art. 9).No general exemption from the obligation to provide evidence that the accommodation is necessary for work-related mandatory reasons can be granted.

It is advisable to consult the Steueramt (Tax Office) of the City of Cologne to avoid any handling problems.

Apart from the employer’s certificate are there any other ways in which employers can document that the accommodation of their employee is necessary for work-related mandatory reasons?
Yes.

Are there cases where the guest does not have to obtain an employer’s certificate for every single accommodation?
Yes. In the case of accommodation where normally always the same companies send the same type of employees on exclusively trips which are necessary for exclusively work-related mandatory reasons (for example, purely “fitter” accommodation facilities), then it is sufficient to submit one employer’s certificate per quarter. The certificate must contain a list of all the relevant employees and the length of their stays. The hotel and the Steueramt (Tax Office) of the City of Cologne must check with each other beforehand so that there are no handling Problems.

A similar type of ruling as the one for the “fitter” accommodation facilities is one where employers such as the Deutsche Bahn AG, the airlines or the federal army, book a contingent of rooms for a large number of employees and where the actual names of the persons requiring accommodation are not known at the time of booking. Here too, it is advisable to contact the Steueramt (Tax Office) of the City of Cologne beforehand.

However, the individual guest must submit the declaration stating that the accommodation is necessary for work-related mandatory reasons.

Yes. For reasons of simplicity, event organisers may, as an exception, issue a summary certificate for participants of tour groups whose accommodation is clearly necessary for work-related mandatory reasons. That certificate must state the names of the participants and the reason for their stay. Each page of the certificate must contain the declaration that the accommodation is necessary for work-related mandatory reasons and the legally binding signature of the tour operator. We recommend contacting the Steueramt [Tax Office] of the City of Cologne in advance to ask whether the prerequisites are met in the individual case.

Irrespective thereof, the individual guest must complete the official forms (Appendix 2 of the KFA-Satzung) and thereby declare that the accommodation is necessary for work-related mandatory reasons (see in particular Art. 9).

No general exemption from the obligation to provide evidence that the accommodation is necessary for work-related mandatory reasons can be granted.

The accommodation facility must charge the tax for the promotion and advancement of culture, unless the declaration is presented upon check-out, at the latest.

The declaration as defined in Art. 7 (2) of the KFA-Satzung must be presented for each individual stay. That also applies to recurring accommodations made on a regular basis (for example to persons making recurring bookings for themselves). Otherwise, the accommodation facility must charge the tax for the promotion and advancement of culture.

For example, if any guest stays in a hotel for 7 days, but only 5 days thereof for mandatory work-related reasons and 2 days for private reasons, the guest may only submit the declaration prescribed under Art. 7 (2) of the KFA-Satzung for the period of 5 days. The tax for the promotion and advancement of culture must be charged for the 2 days for which no declaration has been presented.

If the guest declares that the accommodation is necessary for work-related mandatory reasons, the accommodation facility must retain this declaration and present it to the Steueramt [Tax Office] of the City of Cologne upon their request.

The guest is responsible for the truthfulness of the information.

The case law of higher courts (cf. judgement of the Oberverwaltungs-gericht Nordrhein-Westfalen [Higher Administrative Court of North Rhine-Westphalia], 14 A 316/13 of 23 October 2013) provides that the collection and disclosure of required declarations does not violate data protection laws. As accommodation facilities are non-public offices, they are governed by the provisions of the Bundesdatenschutzgesetz [Federal Data Protection Act] (BDSG) in accordance with Sec. 1 (2) no. 3 of the BDSG. Sec. 4 (1) of the BDSG provides that the collection, processing and use of personal data by non-public offices shall be admissible only if permitted or prescribed by the Federal Data Protection Act or any other legal provision or if the data subject has consented. The KFA-Satzung is such a legal provision. Art. 7 (3) of the KFA-Satzung provides that the accommodation facility is obliged to retain the declaration defined in Art. 7 (2) together with the appendixes as part of the booking process. Sec. 147 of the Abgabenordnung [Fiscal Code] (AO) applies.

Please see also the answer to question No. 10.

The levy of the tax for the promotion and advancement of culture is one of many measures to decrease the budget deficit of the City of Cologne. Cologne is attractive for travellers both as an economic, congress and cultural location. Congresses are held in Cologne as our city provides a wide range of cultural offers. The tax for the promotion and advancement of culture makes an important contribution to consolidating Cologne’s role as a city of culture.

The income to be expected from the tax for the promotion and advancement of culture of approx. EUR 7 million will be allocated annually – practically as “consideration“ – to the areas of culture, education and tourism without incurring any obligations in these areas.
The objectives for using the tax are therefore in line with the name given to it.

The guest may file an application for a refund of the tax for the promotion and advancement of culture with the City of Cologne. The tax will be refunded if the tax for the promotion and advancement of culture has been charged by an accommodation facility and paid to the City of Cologne, although the accommodation was legally not subject to the tax for the promotion and advancement of culture. The legal basis for that procedure is Art. 11 of the KFA-Satzung (guest’s declaration to the city).

The relevant receipts, in particular the declaration that the accommodation is necessary for work-related mandatory reasons (Art. 7 (2) sentence 2 of the KFA-Satzung) shall be attached to the application.

The relevant forms are available for download under the following links:

No. A simple application in writing suffices.

Yes. The official form for guests is available in the German and the English language:

No. No supplements or modifications are permissible as this is an official form.

Only forms that have been completed, in full, will meet the prerequisites for an exemption from the tax for the promotion and advancement of culture. The form will be deemed not fully completed if fields are left blank or were cancelled.

This situation compares to a case where guests refuse to pay the value added tax. If the services are still provided to such guests, the facility must still forward the value added tax.

No. The Statute on Charging a Tax for the Promotion and Advancement of Culture contains no regulation under which a tax exemption needs to be granted if certain conditions are met (for example severe disablement).

Basically, yes.
Trips which are organised privately by pupils or their parents outside of normal school-time (e.g. class trips in the final year of school) are classed as private overnight accommodation expenses and are taxable.

An exception are overnight stays by pupils if the trip is mandatory, i.e. prescribed by educational regulations. Evidence of this must be brought by means of a group collective certificate issued by the school headmaster stating the names of the participants and the reason for the trip.

An overnight stay by a student is not subject to tax if the overnight stay is absolutely necessary for participation in compulsory study events. This is the case, for example, when attending the attendance phase or taking an examination at the University of Cologne. Suitable documents (e.g. certificate of attendance) must be submitted as proof. In addition, the official form for § 7 paragraph 2 of the KFA-Statutes (Statute on charging a tax for the promotion and advancement of culture) must be completed in full (see also item 9).

Each guest who is unable to evidence that the accommodation is necessary for work-related mandatory reasons must pay the tax for the promotion and advancement of culture.

Yes. The website will be updated on a regular basis. The link, however, will remain unchanged, so that information will be easily available at all times.

The accommodation facility may provide refunds before they submit the tax declaration to the City of Cologne (Art. 7 of the KFA-Satzung), such refunds must then be taken into account in the tax declaration.

No.

Yes. § 2 of the Statute on Charging a Tax for the Promotion and Advancement of Culture in the City of Cologne of 18. Nov. 2014 (in short KFA-Satzung) says that the object of the tax is the expense incurred by a guest for the possibility of a paid overnight stay in an accommodation facility. Whether the person actually stays in the accommodation facility is irrelevant and therefore overnight stays which are not taken and which are not cancelled beforehand are still subject to the Tax for the Promotion and Advancement of Culture.

The amount paid by the guest for the pure accommodation will form the basis for assessment even in these cases. A distinction must be made between the following two cases:

1. Payment of the accommodation price to the event organiser or the booking platform
   (indirect payment to the accommodation facility):
   
   In this case, only a part of the payment made by the guest will be forwarded to the accommodation facility. The remainder will be retained as commission. In this case, only the amount paid or forwarded by the event organiser to the accommodation facility (including value added tax) will form the basis of assessment for the tax for the promotion and advancement of culture, however not the retained commission.
2. Payment of the accommodation price by the guest to the accommodation facility
   (direct payment to the accommodation facility):
   
   In this case, the accommodation facility will forward a commission to the booking platform or the event organiser for introducing the guest. The (entire) amount paid by the guest to the accommodation facility (including value added tax) will then form the basis of assessment for the tax for the promotion and advancement of culture.

Yes. The tax will be levied from 01 Dec. 2014, regardless of the date on which the booking was made. If the guest has arrived at an earlier date, the tax liability for accommodation will commence on 01 Dec. 2014.

We have established a hotline for questions regarding the tax for the promotion and advancement of culture. We will provide you with expert information on the new tax under telephone number [+049] (0)221 - 22 19 69 13 Mondays to Fridays from 8 am to 12 pm and Tuesdays from 2 pm to 3.30 pm.