Effective July 1, 2019, Vermont law (Act 71 of 2019, Sec. 7) clarified the application of Vermont Rooms Tax for accommodations made through booking agents.
Booking agents must:
- collect rooms tax on Vermont occupancies; and
- collect rooms tax on all consideration for which the occupant is liable for renting the accommodations.
Definition of Booking Agent
A booking agent includes anyone who facilitates the rental of an occupancy and collects rent for the occupancy through an internet platform, or otherwise. These booking agents are operators under the Vermont Rooms and Meals Tax. Booking agents include online marketplaces and booking websites where accommodations are booked, whether the accommodations are hotels or lodging in private homes, as long as the online marketplace collects the rent from the occupant. Entities providing advertising listings, online or otherwise, are not booking agents if the entity operating the listing or advertising service does not collect rent.
Rent Subject to Tax
Mandatory charges
All consideration paid by the occupant to occupy the accommodations is subject to the rooms tax. This includes mandatory property fees, cleaning fees, and booking agents’ fees, if the fee is mandatory to rent the accommodation.
Optional charges
Charges for the use of facilities, such as the use of a swimming pool or exercise room, that are optionally available to occupants who choose to use them at an extra charge are not considered rent provided that the charges are separately stated and itemized on the occupant’s bill or invoice. These charges, however, may be subject to Vermont Sales Tax under 32 V.S.A. §9771(4).
How to Register for a Room Tax License
Booking agents must register for a rooms tax license before they charge and collect Vermont tax.
How to File
Booking agents that facilitate accommodations booking primarily for hosts who are private homeowners must collect and remit all rooms tax for accommodations in Vermont.
Booking agents that facilitate accommodations booking primarily for hotels that individually hold rooms tax licenses with the State of Vermont must collect all rooms tax for accommodations in Vermont, but must remit tax only on any fees or charges retained by the booking agent. The remainder of the charges must be transferred to hotels and the hotels must remit the tax on the rent received by the hotels.
Transaction Examples
Example 1: A traveler books a hotel room through a booking agent for $150.00. The booking agent charges and retains a $20.00 fee for providing the service.
The traveler is billed as follows:
|
Room charge |
$150.00 |
|
Accommodation fee |
$20.00 |
|
Total rent |
$170.00 |
|
9% rooms tax |
$15.30 |
|
Total amount due |
$185.30 |
|---|
The booking agent must remit tax of $1.80 to the Department of Taxes, the tax on the $20.00 booking fee. The booking agent transmits $163.50 (consisting of the room rent due to the hotel of $150.00 and tax of $13.50) to the hotel. The hotel remits tax of $13.50 to the Department of Taxes.
The tax treatment of this transaction is the same no matter if the room charge and accommodation fee are separately stated and presented to the traveler or combined into one room rate of $170 ($150 for the hotel and $20 for the booking agent).
Example 2: A traveler books an apartment rental owned by a homeowner host through a booking agent for $200.00. The booking agent charges a $30 fee, and the homeowner has decided to charge a cleaning fee of $15.00.
The traveler is billed as follows:
|
Apartment rental charge |
$200 |
|
Accommodation fee |
$30 |
|
Cleaning fee |
$15 |
|
9% rooms tax |
$22.05 |
|
Total amount due |
$267.05 |
|---|
The booking agent must collect and remit tax of $22.05 to the Department of Taxes, which is rooms tax on the rental charge, the accommodation fee, and the cleaning fee. The booking agent then remits $215 to the homeowner host ($200 rental charge plus the $15 cleaning fee). The homeowner host need not make any rooms tax filing with the Department but should keep in mind that rental income is subject to income tax. If the host provides meals, any charges for those meals are subject to meals tax.
Local Option Tax
All booking agents booking accommodations in Vermont must collect a 1% local option rooms tax for accommodations in some towns that levy this tax. If the accommodation is located in a town that levies a local option tax, the 1% local option tax must be collected in addition to the 9% rooms tax. Please note that a few Vermont municipalities impose a lodging tax separate from the Vermont Rooms Tax. The Department of Taxes does not administer or collect these taxes and they should not be reported or remitted to the Department.