From mid-2026, visitors staying in certain types of accommodation, such a hotel, bed and breakfast, hostel, self-catering apartment or guest house, will be charged a fee of five per cent of their accommodation cost per night.

The charge is capped at five consecutive nights, according to the local authority.

Accommodation providers will be responsible for collecting the fee on behalf of the authority.

Ahead of the vote, Jane Meagher, head of City of Edinburgh Council, told councillors that tourism “puts strain on the city’s resources,” which needs funds to develop “in a planned and sustainable way.”

In 2023, Edinburgh received nearly 5 million overnight visitors, who spent £2.2 billion (AUD $3.9 billion), according to national tourism body Visit Scotland’s website.

The council expects the new fee to raise £45-50 million (AUD $88-122 million) a year by 2028 or 2029.

A tourist tax in Edinburgh has been under discussion since 2018 and became possible when the Visitor Levy (Scotland) Act came into effect in July.

Under the act, revenue from the levy must be used to support local facilities and services that business and leisure visitors use heavily, according to the City of Edinburgh Council website.

Some councillors said ahead of the vote that they wanted the charge to be higher, expressing a desire for revenue generated from the levy to be spent on giving residents affordable housing, with housing said to be currently too costly for many people working in hospitality.

Local residents and businesses were consulted after a draft visitor levy was unveiled in August.

While just over half of residents and businesses agreed with a 5 per cent charge, the majority of visitors (62 per cent) were against a levy or thought the fee should be lower, according to a local authority notice.

The cap on the number of nights for the charge was originally drafted as seven but it was reduced to five after observations from Visit Scotland and Edinburgh Festivals, which highlighted that performers and other festival workers during events often stay for several weeks.

Councillors approved the plan last week, ahead of Friday’s final decision, with Meagher calling the move “a once in a lifetime opportunity to invest tens of millions of pounds towards enhancing and sustaining the things that make our city such a great place to visit – and live in – all year round,” according to a news release.

Edinburgh joins a growing list of European cities to introduce a tourist tax in recent years.

The Welsh government plans to introduce similar legislation to Scotland this year.

Amsterdam is thought to have the highest tourist tax in Europe, with a nightly fee built into hotel room prices of 12.4 per cent of the room rate.

The same charge is applied to camping sites and holiday rentals in the Dutch capital, while sea and river cruise operators must pay €14.50 (AUD $28.20) per passenger, according to the City of Amsterdam website.