On 7th June 2018, the European Commission sent a reasoned opinion to Austria about its implementation of the special VAT scheme for travel agents (TOMS) on the basis that it:
- excludes the application of TOMS to business-to-business (B2B) supplies (a key feature of the scheme is that such supplies are within its scope); and
- infringes CJEU case law (Commission v. Spain, Case C-189/11) that states the taxable amount must be calculated on a transaction-by-transaction basis, and not by using global accounting.
These actions echo previous measures taken by the Commission against Germany earlier this year for the very same TOMS related infractions. In that instance, once the case came to the Court of Justice of the European Union (CJEU), it ruled in favour of the Commission. If Austria doesn’t change its policy within the next two months, it is likely just a matter of time before it too, will face a referral to the CJEU.
Other countries including the UK still use the same approach as Austria. Complying with the Commission’s request would bring undesirable changes to the travel sector such as having to make significant changes to accounting systems and a need to review structuring through the supply chain.