Reseller Travellers Included, Single Position-Based VAT Calculation Excluded.
The European VAT Directive enables Member States to apply a special margin scheme for travel agents (TOMS). However, there are slight differences in the rules and application of the special scheme across the EU.
The Hungarian VAT Act defines TOMS as “travel services partially or fully of a touristic nature (specifically passenger transport, accommodation, and tourist guide services) that a taxable person provides to a traveller by way of purchasing services and goods from other taxable persons on its own name but on behalf of the traveller”.
As of 1 January 2020, the Hungarian TOMS legislation will be changed and the new legislation will
- widen the scope of the definition of a traveller; and
- narrow down the number of applicable VAT calculation methods to one option.
1. Definition of traveller
Based on current legislation, “traveller” is defined as a non-taxable or taxable person who undertakes the travel service in its own name and on its own behalf. The customer has to make a declaration to the travel organizer on whether it purchases such services as a traveller or not.
As opposed to that, from 1 January 2020 the traveller can also be someone who purchases travel services in order to recharge these services (i.e. a wholesaler).
2. Calculation of VAT
Currently, there are two methods to calculate VAT on the margin provided that the special scheme applies:
a) Method based on special record keeping (taxable amount is the margin calculated based on a per trip basis);
b) Method based on single positions – this can be used if previously applied for (the taxable amount is based on the margin calculated by each position, where a position includes travel services related to the same geographical location with the same content and same quality, this method is also known as the cumulative or global approach).
As of 1 January 2020, the payable VAT amount may only be calculated using option a).
As a consequence of the above, a wider range of taxable persons may fall under the scope of TOMS in Hungary, while the calculation methods will – in a way – be simpler, allowing tour operators to use the special record keeping method only, calculating VAT on the margin of each travel.