--- title: "Value-added Taxation of Hospitality Services from the Standpoint of Equal Tax Treatment and Competitive Neutrality" authors: - name: "Kangasharju, Aki" url: "https://www.etla.fi/henkilot/kangasharju-aki/" sameAs: - "https://twitter.com/AkiKangasharju" - name: "Kuusi, Tero" url: "https://www.etla.fi/henkilot/kuusi-tero/" sameAs: - "https://twitter.com/TeroKuusi" - name: "Markkanen, Jaakko" url: "https://www.etla.fi/henkilot/markkanen-jaakko/" sameAs: - "https://orcid.org/0000-0002-4743-7790" - "https://scholar.google.com/citations?user=S810psIAAAAJ" - "https://x.com/JaakkoMarkkanen/" - "https://markkaj.github.io/" date_published: "2026-11-09" series: "ETLA Raportit - Reports" series_number: "183" issn: - "2323-2447" - "2323-2455" jel_codes: - "H21" - "H22" - "H25" - "L83" - "Z38" language: "fi" publisher: "ETLA Economic Research" pdf_url: "https://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-183.pdf" identifier: "https://www.etla.fi/julkaisut/id/ETLA-Raportit---Reports-183" abstract_translations: en: "Theoretical studies suggest that VAT should have only one rate. These results, however, rest on assumptions that do not hold for all services. In practice, the buyer can replace certain taxed services with their own untaxed household work, with tax-free sales on passenger ships or with a service taxed in another country. A meal cooked at home for oneself is outside the scope of VAT, but a meal produced in a restaurant is not. From the neutrality of taxation perspective, this provides a rationale for targeting reduced VAT rates at all services with close home-produced substitutes. A one-hour flight from Helsinki to Stockholm carries no VAT, but a one-hour flight to Oulu does. Competition would become more equal if an ad valorem tax were levied on transport for international trips starting in Finland. Shipping companies receive a crew subsidy that onshore businesses do not. From a purely economic standpoint, the VAT exemption for restaurant sales on board could on these grounds be abolished, as could the crew subsidy for catering and service staff on passenger ships. This conclusion does not take into account the security-of-supply perspective on how the changes would affect freight capacity in foreign trade and market equilibrium." --- # Value-added Taxation of Hospitality Services from the Standpoint of Equal Tax Treatment and Competitive Neutrality **Published:** 2026-11-09 **Categories:** Reports **URL:** https://www.etla.fi/en/publications/reports/majoitus-ja-ravitsemispalvelujen-arvonlisaverotuksen-tasapuolisuus-ja-kilpailuneutraliteetti/ #### Abstract Theoretical studies suggest that VAT should have only one rate. These results, however, rest on assumptions that do not hold for all services. In practice, the buyer can replace certain taxed services with their own untaxed household work, with tax-free sales on passenger ships or with a service taxed in another country. A meal cooked at home for oneself is outside the scope of VAT, but a meal produced in a restaurant is not. From the neutrality of taxation perspective, this provides a rationale for targeting reduced VAT rates at all services with close home-produced substitutes. A one-hour flight from Helsinki to Stockholm carries no VAT, but a one-hour flight to Oulu does. Competition would become more equal if an ad valorem tax were levied on transport for international trips starting in Finland. Shipping companies receive a crew subsidy that onshore businesses do not. From a purely economic standpoint, the VAT exemption for restaurant sales on board could on these grounds be abolished, as could the crew subsidy for catering and service staff on passenger ships. This conclusion does not take into account the security-of-supply perspective on how the changes would affect freight capacity in foreign trade and market equilibrium. --- ## Additional Information **Kirjoittajat:** Kangasharju, Aki - Kuusi, Tero - Markkanen, Jaakko **Publication Research:** No 65310, 65321 **Kansikuva:** https://www.etla.fi/wp-content/uploads/etla-raportit-reports-183-kansi.jpg **Lataa Pdf:** https://www.etla.fi/wp-content/uploads/ETLA-Raportit-Reports-183.pdf **Key Words:** Value-added tax, Hospitality, Competitive neutrality, Tax competition, Household production **Jel:** H21, H22, H25, L83, Z38 **Paivays:** 09.11.2026 **Sivuja:** 38 **Kieli:** fi **Sarja:** ETLA Raportit - Reports **Sarja Nro:** 183 **Issn:** 2323-2447, 2323-2455 (Pdf) **Saatavuus:** 2 ## Bibliographic metadata (JSON-LD) ```json { "@context": "https://schema.org", "@type": "ScholarlyArticle", "@id": "https://www.etla.fi/julkaisut/id/ETLA-Raportit---Reports-183", "headline": "Value-added Taxation of Hospitality Services from the Standpoint of Equal Tax Treatment and Competitive Neutrality", "inLanguage": "fi", "publisher": { "@type": "Organization", "name": "ETLA Economic Research", "url": "https://www.etla.fi", "logo": { "@type": "ImageObject", "url": "https://www.etla.fi/wp-content/uploads/logo-etla_logo.svg" } }, "datePublished": "2026-11-09T00:00:00+00:00", "author": [ { "@type": "Person", "name": "Kangasharju, Aki", "url": "https://www.etla.fi/henkilot/kangasharju-aki/", "sameAs": [ "https://twitter.com/AkiKangasharju" ] }, { "@type": "Person", "name": "Kuusi, Tero", "url": "https://www.etla.fi/henkilot/kuusi-tero/", "sameAs": [ "https://twitter.com/TeroKuusi" ] }, { "@type": "Person", "name": "Markkanen, Jaakko", "url": "https://www.etla.fi/henkilot/markkanen-jaakko/", "sameAs": [ "https://orcid.org/0000-0002-4743-7790", "https://scholar.google.com/citations?user=S810psIAAAAJ", "https://x.com/JaakkoMarkkanen/", "https://markkaj.github.io/" ] } ], "abstract": "", "keywords": [ { "@type": "DefinedTerm", "name": "Value-added tax", "@language": "en" }, { "@type": "DefinedTerm", "name": "Hospitality", "@language": "en" }, { "@type": "DefinedTerm", "name": "Competitive neutrality", "@language": "en" }, { "@type": "DefinedTerm", "name": "Tax competition", "@language": "en" }, { "@type": "DefinedTerm", "name": "Household production", "@language": "en" } ], "isPartOf": { "@type": "PublicationIssue", "issueNumber": "183", "isPartOf": { "@type": "Periodical", "name": "ETLA Raportit - Reports", "issn": [ "2323-2447", "2323-2455" ] } }, "mainEntityOfPage": "https://www.etla.fi/en/publications/reports/majoitus-ja-ravitsemispalvelujen-arvonlisaverotuksen-tasapuolisuus-ja-kilpailuneutraliteetti/", "url": "https://www.etla.fi/en/publications/reports/majoitus-ja-ravitsemispalvelujen-arvonlisaverotuksen-tasapuolisuus-ja-kilpailuneutraliteetti/", "hasPart": { "@type": "CreativeWork", "inLanguage": "en", "text": "Theoretical studies suggest that VAT should have only one rate. 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