Cruise vacations in Europe are taxed significantly less than hotel stays despite their much greater environmental impact, according to a new study by transport and environmental advocacy group Transport & Environment (T&E).
The report found that passengers staying on cruise ships pay almost half the tax burden of travelers staying in hotels, even though cruise vessels generate substantial greenhouse gas emissions, air pollution, and pressure on popular tourist destinations.
T&E analyzed taxes on €100-per-night hotel stays in France, Italy, and Spain and compared them with cruises at similar price points. On average, hotel guests pay taxes equal to 23% of the room price, while cruise passengers pay only 12%.
According to T&E, the disparity exists because cruise ships are legally classified as maritime transport rather than tourism accommodation. That classification allows cruise operators to benefit from exemptions on value-added tax (VAT), fuel taxes, and other charges that apply to land-based tourism.
“Cruises are not a mode of transportation but the destination itself,” said Fanny Pointet, Shipping Manager at T&E. “Yet they receive many of the same tax advantages as freight transport.“
The organization argues that revising tax rules would help cities better manage pollution, maintain infrastructure, and address growing concerns over overtourism in major cruise destinations.
Environmental costs remain largely uncovered
The study estimates that the environmental costs generated by cruise ships, including greenhouse gas emissions and air pollution, ranged from €790 million to €1.3 billion across France, Italy, and Spain in 2025.
According to T&E, revenues generated through the European Union’s Emissions Trading System (ETS) cover only a fraction of those climate-related costs. The report says climate damages exceed ETS revenues by roughly two to three times, while no EU-wide tax currently addresses air pollution from cruise operations.
New passenger levy proposed
T&E estimates that introducing a €15 tax per passenger for every port call could generate approximately €335 million annually across France, Italy, and Spain.
The organization suggests the revenue could be used to restore coastal ecosystems, fund shore power infrastructure that allows ships to plug into cleaner electricity while docked, or support national budgets dealing with tourism impacts.
However, T&E says a passenger levy alone would not fully offset the sector’s environmental footprint.
The group is also calling for stronger EU sustainable marine fuel requirements under FuelEU Maritime, stricter energy efficiency standards for cruise ships, and, where necessary, limits on the number of cruise ship calls at overcrowded ports.
Finally, T&E recommends ending the favorable tax treatment enjoyed by cruise operators by aligning VAT rules for cruises with those applied to hotels and other land-based tourism businesses.
The Cruise Lines International Association (CLIA) is rejecting calls for new national cruise ticket taxes, arguing they would increase costs for passengers without addressing the real challenges facing destinations.
