Will the highest tourist tax in the world work?

Yet more discussion about the wisdom and folly of tourism taxes. This time the debate in the Netherlands was kicked-off with an announcement from the Municipality of Amsterdam that it wants to levy “the highest tourist tax in the world” by 2031. Well, almost.

The Sustainable Development Fee levied in Bhutan is currently $100 per person per night – comfortably above the Amsterdam proposed level of around €25 per person.

If we discount the tiny Kingdom of Bhutan, however, and only look at European cities, Amsterdam will comfortably be ahead of the pack in tourist tax terms. The argument is that the city wants less tourists, and that it wants visitors to pay their fair share of the costs of running the city. The tourist tax will therefore rise from the current 12.5% to 20% in 2031. This comes in addition to the rise in Value Added Tax on hotel stays, which has risen from 9% to 21%. This means that the tax burden on hotels will rise from 21.5% in 2025 to 41% by 2031 – almost double.

The big question, as we have said before in this blog, is whether a tax increase will have the desired effect of reducing visitor numbers? A study commissioned by Amsterdam suggested that tax levels would need to increase threefold before any impact would be felt. The city seems to be moving in this direction.

As more cities introduce and/or increase visitor taxes, some evidence on the effects is beginning to surface. With Covid now a distant blip in most hotelier’s memories, the figures are also a bit easier to read.

The rapid increase in tourism tax revenues make a welcome addition to Amsterdam’s budget. Tourist taxes have risen from just under 14% of total city tax revenues in 2023 to almost 17% in 2026. Little wonder that tourist taxes are now attracting more attention and debate. The hotels in Amsterdam are less than happy about the tax increases, particularly now they are starting to see the effects on overnight stays. As one hotel reported to NOS: "Our occupation levels are still acceptable, but with the combination of higher tourists taxes and VAT we are seeing a reduction of around 10%.”

The idea of a drop in tourism is supported to some extent by official statistics, with occupancy levels for Amsterdam hotels still slightly lower than before the pandemic. Hotel values in Amsterdam have also fallen, according to the Hotel Valuation Index.

Thanks to our friends at Tourmis we can also check how Amsterdam is performing relative to other cities, and what relationship tourism business has to tourist taxes. Interestingly, there is no significant relationship between total tourism overnights in European cities and the level of tourist tax. This is because some major destinations attracting large numbers of tourists, such as London, do not have a tourism tax.

If we look at the change in the number of overnights for 2025, however, we do see a clearer pattern. Excluding the cities with no tax, the correlation between change in tourist overnights and the level of tourism tax is negative (-0.23), indicating that cities with higher tourism taxes had lower growth in tourist overnights. In fact, three cities had a decline in tourism: Barcelona (-0.6%) Berlin (-3.8%) and Venice (-0.6%). While these drops may seem small, this can be set against strong post-pandemic recovery of tourism in these cities. So we might be seeing the first signs that tourist tax increases are having an effect.

Of course this is a complex issue with many other factors at play, not least developments in the Short Term Rental market (Airbnb, etc). It could be that guests have shifted from hotels in some cities to STR accommodation, but with many cities now clamping down on Airbnb there may be a continued downward trend in overnights. The real test may come in 2028, when Barcelona is due to ban Airbnb and other STR operations. In the meantime, watch this space for updates.