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Travel agent discount case loses at the Court of Justice of the European Union

24 January 2014

The Court of Justice of the European Union (CJEU) confirmed last week that travel agents cannot reduce the amount of VAT they pay when they grant customers discounts on the price of holidays.

Travel agents are usually remunerated for their services in arranging a holiday for a customer by receiving a commission from the tour operator. The CJEU’s judgment is that the UK is right to require travel agents to account for VAT on the full value of this commission, even if they forgo an element of it by granting the customer a discount on the price of their holiday.

Simon Prinn, an indirect tax partner at Deloitte, commented: “This judgment confirms that UK travel agents should still account for VAT on the full amount of their commission, even if they use some of the commission to fund a discount to the price of the holiday.

“Many UK travel agents have submitted claims for overpaid VAT. While the Ibero Tours case concerns a German taxpayer, the UK is obliged to implement judgments of the European Court. I am sure that HM Revenue & Customs will read the decision and communicate their position regarding UK travel agents in the near future.

“The travel sector will be disappointed with the European Court’s judgment as it results in a situation where the tax authorities will continue to receive VAT on an amount more than the customer has actually paid. The travel industry was hopeful that the European Court would follow the Opinion of the Advocate General, which was that travel agents should reduce the amount of VAT they pay when they fund discounts to the price of holidays.”   


Notes to editors

About the case
The CJEU held that travel agents cannot reduce the amount of VAT they account for when they grant customers discounts on the price of their holidays for the following reasons:

  1. The supply of the holiday to the customer by the tour operator and the supply of intermediary services by the travel agent to the tour operator are two separate transactions; and
  2. The discount granted by the travel agent affects neither the consideration received by the tour operator for the holiday nor the consideration received by the travel agent for its intermediation service.

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.

Member of Deloitte Touche Tohmatsu Limited.

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Celine Gordine-Wright
Deloitte LLP
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