Recent news

26 October 2022 | ETOA participate in EU stakeholder discussion on options for change in VAT application on travel and tourism. EC discussion document here.

23 October 2022 | German VAT changes for 2023: we have updated page here to include latest briefing and commentary.


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
  • Germany is planning unilateral change from 1st January 2023

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

Reform of TOMS: milestones

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

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.

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

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. In the case of Germany, its unilateral plans for 2023 appear to be revenue negative for the public sector, as well as damaging to the inbound industry.


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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.

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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