ECJ judgement on the VAT treatment of travel agents supplies of hotel accommodation

31 July 2023

The European Court of Justice (ECJ) has made its judgement in the case C-108/22. This case looked at whether the special scheme for travel agents, referred to as the Tour Operators Margin Scheme (TOMS), should be applied to the purchase and resale of hotel services where no additional services accompany the sale. 

Per the EU VAT directive, TOMS requires travel agents to account for VAT on the profit margin element of their trade regardless of whether the service is provided to a business traveller or to a consumer. They should also be able to calculate the margin for each transaction and not just over the whole VAT return period. 

The judgement in this case ruled that TOMS should be applied in these circumstances meaning that the travel agent buying and reselling hotel services must account for VAT using the special margin scheme, preventing them from having to register for VAT in every country where they are making supplies of hotel services.

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