The five percent "city tax" will be added to the cost of each overnight stay in all Berlin hotels, hostels, guest-houses, holiday flats and camp sites from July.
The tax, which is already in place in tourist hotspots across the world, is expected to bring in an extra €25 million a year for the capital city - half of which will be fed back into Berlin's tourist industry.
Berlin's senators said this week that while the city welcomed the current tourist boom, swelling visitor numbers had put a heavier burden on the capital and its infrastructure.
Advocate of the tax Senator Ulrich Nußbaum pointed to 24 popular tourist destinations including New York, Paris, Rome, Barcelona and Brussels, which were already benefiting from similar schemes.
"We're in good company," he told the Berlin Senate during the debate on the proposed levy on Tuesday.
But the tax has proved controversial with hoteliers, who say smaller hotels will be hit because they are often not in a position to increase prices.
The city tax - which is already charged on stays in many German cities including Hamburg, Cologne, Osnabrück, Dortmund and Trier - will only be charged when tourists state the reason for their trip as "private".
Those on business trips are exempt from the charge - but they will have to prove it - for example if a company covers cost of stay. Others must show they are in the city for professional reasons by filling in a form with details of their trip.
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Critics say this will not be policed properly and that people will cheat the system by saying they are on business, to the detriment of honest visitors.
"We are waiting for the first hotel to make a complaint and we will definitely be supporting them when they do," Thomas Lengfelder, of the Berlin chapter of the German hotelier's association (DEHOGA) told Berliner Zeitung on Tuesday.