VAT and compensation applied for not honoring a hotel reservation.

The French Conseil d’État ruled that hotels can charge a fee (commonly known as a “no-show” fee) to customers who fail to cancel their reservations and do not show up, and these fees are subject to Value Added Tax (VAT).
The court determined that the fees charged represent a direct counterpart to the accommodation service that the customer committed to pay for when making the reservation, regardless of whether the service was utilized.
This decision follows European Court of Justice jurisprudence, affirming that any payment tied to a service rendered, even if not used, must be subjected to VAT, thereby rejecting the hotel’s appeal against the tax authority’s ruling.

Source

Taxable transaction