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:
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
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
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The information contained in this press release is correct at the time of going to press.
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