Changes to the application of the Tour Operators Margin Scheme (TOMS) in Germany

9 November 2015

The European Commission has issued a reasoned opinion requesting that Germany amend their VAT legislation on the application of a special scheme for travel agents, referred to as the Tour Operators Margin Scheme (TOMS), in order to bring it in line with the EU VAT directive. The scheme allows travel agents to account for VAT only on the profit margin element of their trade. The current German VAT legislation states that this scheme can only be applied to services provided direct to consumers and also allows travel agents to set one single profit margin for all supplies sold during a VAT return period. However, based on previous court rulings, the European Court of Justice stated that this application is incorrect and that TOMS should apply to services provided to business customers as well. The Court also stated that a travel agent should be able to calculate the margin per single travel service provided and not just on the whole VAT period.


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