The European Commission (EC) opens a public consultation on the evaluation of the Tour Operators Margin Scheme (TOMS). Also known as the special VAT scheme for travel agents. We would love to get your feedback on how the scheme affects you.
TOMS is a simplified margin scheme for businesses that buy in and re-sell travel, accommodation and certain other services as principals or undisclosed agents. Initially, the scheme design was for traditional tour operators only. However, anyone who makes ‘margin scheme supplies’ now falls within its scope.
Businesses account for VAT due on sales made under TOMS on the profit margin. That is the amount received from customers minus the amount paid to suppliers. However, it is not possible to recover VAT on margin scheme supplies bought in for resale. VAT on general business overheads though, which are outside TOMS, are reclaimable in the normal way. The key benefit is that it accounts for VAT without businesses having to register in every EU Member State in which the services and goods are considered to be supplied.
EU Member States interpret the rules of TOMS differently. Various ECJ cases and infraction proceedings brought against Member States try to align the rules. Therefore, the EC’s new consultation evaluates whether the scheme is still fit for purpose. The EC will evaluate the effectiveness of the simplified rules for this sector whilst collecting VAT by the EU country of consumption of the goods or services.
To achieve this evaluation, the EC wants to gather the views of all stakeholders on how the TOMS meets its objectives. Whether it is still effective, for example. In addition to what extent existing rules are still relevant and aligned with stakeholders’ needs. In particular, the evidence gathered through this consultation should allow assessing the efficiency of those rules. This includes:
- Identifying potential distortions of competition; and
- Regulatory costs and benefits for businesses
Provide Your Feedback
If you are in the travel industry or an event organiser taxed under TOMS, we would love to get your feedback on how the scheme affects you. In addition to what changes you would make to the scheme to make it more efficient for your business. We would be happy to report this back to the EC as part of their consultation on the Tour Operators Scheme (TOMS).
Please contact one of our VAT experts for further information on the or to discuss your concerns.