The European Commission has issued a reasoned opinion, under which they have requested Germany amend the way it applies the Tour Operators Margin Scheme (TOMS) such that TOMS will apply on business to business transactions (often referred to as wholesale supplies) as well as to private individuals.
TOMS requires VAT to be accounted for on the profit margin element only, and applies on packages sold by travel agents or tour operators but can often effect other businesses such as event companies.
The request is based on the 2013 European Court of Justice’s ruling that such schemes must apply to all businesses customers, as well as private individuals.
The Commission’s request takes the form of a reasoned opinion, however if no response is received within two months, the Commission may refer Germany to the European Court of Justice.
This is an interesting development and we may see the European Commission issue further opinions to other Member States who have not implemented the changes to date – the UK for example has yet to implement this change in respect of wholesale supplies.