Recent news

27 June 2023 | Germany has postponed proposed changes in its VAT treatment of non-EU sales. More information here.


How tourism is taxed is the most influential factor on business viability. The added value of intermediation is often poorly understood. Regarding VAT, the EU is at a disadvantage for three reasons: it taxes tourism exports, the price of holidays to non-EU destinations is VAT-free, and there is additional complexity due to the range of rates applicable (discounted VAT has been shown to support job-generation).

VAT reporting and collection is complicated in a business where costs are spread over many countries, among multiple service types, with buyers in the EU or worldwide. The Tour Operators Margin Scheme (TOMS) remains an intelligent simplification: it shares tax benefit between destination and EU operator’s country of establishment; it minimises the need for multiple registration; it is relatively easy to administer.

However, TOMS still taxes exports to non-EU clients. It does not apply to non-EU businesses selling EU product (there is very little volume in retail sales of EU travel product to non-EU consumers). Relocation driven by tax efficiency is often not open to small businesses. The service of packaging is often not understood as taking place where consumer or client are located, rather than where the package itself is delivered.

What you need to know

  • The EU is reviewing how VAT should apply to travel and tourism: significant change is likely
  • Understanding of how the travel trade works is often insufficient among policy makers
  • There is an urgent need to illustrate the impact of options on business, EU and non-EU
  • Publicly-funded tourism bodies cannot easily object to government policy

For note on UK application of TOMS from 2021, see Elman Wall newsletter.

ETOA’s policy objectives

  • Exports of tourism products and services should not be taxed in destination
  • Value-adding should be encouraged, among businesses of all sizes
  • Ease of compliance, with better consultation and notice of change

What we are doing

  • Lobbying and participation in expert group on legislative review
  • Expert advice through seminars, online briefings and helpline
  • Research and reports

Reforming TOMS: updates

July 2023: ETOA’s current understanding is that, owing the linkage between TOMS VAT reform, duty free tax arrangements and passenger transport tax within a single legislative package, and the Commission’s current focus on VAT in the digital age, a new legislative proposal affecting TOMS may not be published until after mid-2024 EU elections at the earliest.

March 2023: The EC’s VAT committee notes that: “The study launched to assess the functioning of the VAT rules applicable to travel and tourism sectors and to develop options for the simplification and modernisation of those rules is to be finalised shortly. Decision has been taken to pause the work for the time being which is the reason why the public consultation, planned for the end of 2022/ beginning of 2023, has not been launched yet. A legislative initiative is still on the Agenda for next year.” [source: Minutes of VAT Committee 20 March 2023]

October 2022: EC publishes discussion document outlining options for change. Regulatory proposals are expected in 2023.

January 2022: ETOA and partners publish a common industry position on options for reform.

February 2021: The EU published factual report of 2020 consultation.

May 2020: The European Commission launched public consultation on future policy options.

April 2020: The European Commission published a roadmap setting out scope of policy review.

Tax reform is complex. At an EU level, significant regulatory change requires unanimity among all member states. Tax on tourism makes sense if it improves infrastructure and service. Looking after and making accessible Europe’s cultural and natural heritage requires funding. Taxation without benefit to the taxpayer may bring short-term relief to hard-pressed budgets, but it will cause long-term competitive harm.


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Tax and tourism: a destination management problem? February 2019

Position paper giving European perspective in response to proposed new tourism tax in Scotland. Also mentions Amsterdam, Barcelona, Edinburgh, Florence, Rome and Paris.

Download now

Changes to German VAT from 2023: ETOA Briefing

This 2-page briefing explains what is proposed, who will be affected and what the implications will be, how the legislation will be imposed and what the practical objections are.

Download now