Further to the European Commission launching infringement proceedings against it at the start of the year, Belgium has enacted legislation changing the way it applies the special VAT scheme for travel agents (TOMS).
These new rules came into effect on 25th May 2019.
TOMS is an EU-wide simplification measure which must be used by businesses that buy in and resell travel, accommodation, and other services as principal to a consumer. Under the scheme, the VAT due on sales is accounted for by reference to the “margin”, which is the difference between the amount received from customers and the amount paid to suppliers.
In the past, Belgium only applied TOMS when travel services were supplied to private individuals. However, following the CJEU case of the Commission v Germany in 2018, Member States are now also required to apply TOMS when business-to-business supplies take place. Consequently, Belgium has amended the definition of “traveller” within its VAT legislation, so that it covers both types of recipients.
On a practical level, these changes affect not only travel agents and tour operators but any business that makes supplies of these travel services, for instance, event organisers and hosts. Therefore, a greater number of companies established in Belgium may now be required to apply TOMS.
If you believe these developments impact your business and would like further advice on your next steps, please do get in touch.