Bulgaria's constitutional court ruled on April 5 to declare the tourism tax, introduced through legislative amendments in 2011, unconstitutional.

The tax, levied on hotel owners, is calculated based on occupancy rate in the hotel, but assumes that at least 30 per cent of a hotel's rooms are booked at all times.

Hotel owners universally criticised the tax as intentionally burdensome, saying that the majority of hotels were in winter or summer resorts and had occupancy rates below the law's provisions for most of the year (many hotels in Bulgaria shut down operations entirely out-of-season).

The court said that the law mixed two types of direct taxation - based on revenue (overnight stays) and property (hotel size) - a practice that the constitution did not allow for.

Before the introduction of the new tax, hotels charged their customers a fixed-sum fee as tourism tax, but revenue authorities claimed that hotel owners often under-reported the number of their clients and were not paying the tourism tax in full. The new law was meant to fix the problem and shore up Budget revenues.

The amendments were referred to the constitutional court by the two main opposition parties, the socialists and the predominantly ethnic Turk Movement for Rights and Freedoms, who argued that the law subverted the object of taxation (effectively taxing the hotel's size based on the number of rooms, rather than the actual number of overnight stays). Furthermore, by taxing "hypothetical revenue", it breached the constitutional principle that taxes should be commensurate with revenue, the opposition said.

After the court's decision was announced, Deputy Economy Minister Ivo Marinov said that the ministry will not abandon the tourism tax, but will have to find another way to tax hotel owners.