Understanding the Tour Operator Margin Scheme for Reselling Airline Tickets in the UK

Here is a summary of the recent tribunal case with the European Court of Justice (C-793/23 Dragoram Tour) regarding VAT on the resale of airline tickets:

1. TOMS Overview: The Tour Operator Margin Scheme (TOMS) applies to businesses buying and reselling certain services (e.g., accommodation, transport) without material alteration, preventing them from recovering input VAT but not charging VAT to clients.
2. Case Background: Dragoram Tour, a Romanian travel agency, bought and resold airline tickets to private individuals without additional services, believing standard VAT rules should apply.
3. Legal Challenge: The case was escalated through national courts and referred to the European Court of Justice (CJEU) to determine if TOMS applies to the resale of airline tickets alone.
4. CJEU Ruling: The CJEU ruled that TOMS must be applied to all taxable persons reselling airline tickets without material alteration, even if no other services are provided, making the application of TOMS mandatory.
5. Implications: While the decision does not impact the UK directly, it aligns with HMRC’s guidance that individual services bought and resold without material alteration fall under TOMS.

Source: essentiaglobalservices.com

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See also

• C-763/23 (Dragoram) – Order – TOMS applicable if airline tickets are resold

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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