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VAT treatment of supplies made by wholesale tour operators

26 September 2013

The Court of Justice of the European Union (CJEU) has today confirmed the opinion of the Advocate General on the VAT treatment of tour operators’ wholesale supplies.

It has judged that eight EU Member States (Spain, France, Portugal, Italy, Greece, Poland, Finland and Czech Republic) are correctly treating wholesale supplies as falling within the VAT tour operators margin scheme (TOMS).  The remaining EU Member States tax wholesale supplies outside of TOMS.

The main implications of the CJEU’s judgment are that:

  • wholesale tour operators established in the eight infracted EU Member States, that were subject to the court hearing, will continue to be required to account for VAT under TOMS on all travel services they sell which are consumed within the EU;
  • the VAT treatment of wholesalers in the UK and the other EU Member States not involved in the case will, in all probability, have to change.  European law requires the EU Member States to have harmonised VAT systems.  Therefore, the UK and other EU Member States will have to start collecting UK VAT, under TOMS, from UK wholesalers selling travel services consumed in the European Union;
  • wholesale tour operators established outside of the EU will not be required to account for VAT under TOMS; and
  • it is also possible (although not explicit from the judgment) that the UK will have to review whether it can continue with the transport company scheme used by retail tour operators to ensure that the element of their margin attributable to passenger transport is taxed at the zero rate.

Daniel Barlow, VAT partner at Deloitte, said: “This judgment raises a number of big questions for both wholesalers and retailers in the travel sector.  The first is how much lead-in time the sector will be given to adjust pricing and systems. A short lead-in time could erode margins if wholesale prices have been set assuming that VAT will not apply.  Secondly, the extent to which wholesalers will now make supplies from non-EU establishments.  TOMS only applies to tour operators established within the EU.  If the wholesale market does move to non-EU locations, this will probably be a trigger for the EU member states to reform the entire TOMS VAT system.  Finally, the question as to whether tour operators will be able to continue the transport company arrangements.  These enable them to apply the zero rate of VAT to supplies of flights and other passenger transport.

“It is inevitable that the UK will apply the VAT Tour Operators’ Margin Scheme to supplies made by UK based wholesalers at some point in the future.”


Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

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Celine Gordine-Wright
Deloitte LLP
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