Issue
- The TOMS means that VAT should be applied only on the margins made from sales of travel services to consumers.
- In return, however, tour operators cannot recover input VAT in relation to travel services purchased from other businesses.
- The TOMS Scheme is applicable on sales to travellers (B2C) as to other businesses (B2B). This is actually what some of the ECJ Cases are about.
Relevant articles in the EU VAT Directive 2006/112/EU
Article 306
1. Member States shall apply a special VAT scheme, in accordance with this Chapter, to transactions carried out by travel agents who deal with customers in their own name and use supplies of goods or services provided by other taxable persons, in the provision of travel facilities.
This special scheme shall not apply to travel agents where they act solely as intermediaries and to whom point (c) of the first paragraph of Article 79 applies for the purposes of calculating the taxable amount.
2. For the purposes of this Chapter, tour operators shall be regarded as travel agents.
Article 307
Transactions made, in accordance with the conditions laid down in Article 306, by the travel agent in respect of a journey shall be regarded as a single service supplied by the travel agent to the traveller.
The single service shall be taxable in the Member State in which the travel agent has established his business or has a fixed establishment from which the travel agent has carried out the supply of services.
Article 308
The taxable amount and the price exclusive of VAT, within the meaning of point (8) of Article 226, in respect of the single service provided by the travel agent shall be the travel agent’s margin, that is to say, the difference between the total amount, exclusive of VAT, to be paid by the traveller and the actual cost to the travel agent of supplies of goods or services provided by other taxable persons, where those transactions are for the direct benefit of the traveller.
Article 309
If transactions entrusted by the travel agent to other taxable persons are performed by such persons outside the Community, the supply of services carried out by the travel agent shall be treated as an intermediary activity exempted pursuant to Article 153.
If the transactions are performed both inside and outside the Community, only that part of the travel agent’s service relating to transactions outside the Community may be exempted.
Article 310
VAT charged to the travel agent by other taxable persons in respect of transactions which are referred to in Article 307 and which are for the direct benefit of the traveller shall not be deductible or refundable in any Member State
ECJ Cases Decided
- C-163/91 (Van Ginkel Waddinxveen) – TOMS applies for Provision of holiday accommodation by a travel agent without transport
- C-291/03 (MyTravel) – Travel agents must calculate VAT liability based on market value
- C-200/04 (iSt) – Organization of language trips and study stays abroad in scope of TOMSC-189/11 (Commission vs. Spain)
- C-189/11, C-193/11, C-236/11, C-269/11, C-293/11, C-296/11, C-309/11, C-450/11 (Commission v Member States) – TOMS applies to any type of customer
- C-220/11 (Star Coaches) – Order – A transport company offering only passenger transport by coach to travel agencies does not fall within the scope of TOMS
- C-557/11 (Kozak) – Special VAT scheme for travel agencies not for transport services provided by the travel agency itself
- C-380/16 (Commission v Germany) – Exclusion of travel services sold to other businesses from the TOMS is not compatible with VAT law
- C-552/17 (Alpenchalets Resorts) – Provision by a travel agency of a holiday residence rented with additional benefits each constitutes a single service under TOMS
- C-787/19 (European Commission v Republic of Austria) – Failure to align with VAT rules for travel agents
- C-108/22 (Dyrektor Krajowej Informacji Skarbowej) – Resale of accommodation services fall under the special scheme for travel agents
