Germany Changes in VAT Treatment
Last reviewed 27 April 2026
Germany proposals to change VAT treatment
April 2026: The German VAT Application Decree, which caused so many problems, was formally suspended until 31st of December 2026. It asserts that TOMS cannot be used by non-EU operators, and consequently such tour operators have to register and account for VAT on travel sales with a place of supply in Germany. Given that it was suspended pending the reform of VAT by the European Commission, and that reform is underway, it may be that it will be suspended again.
It ought to be noted that the regulation was not formally the law but the tax administration’s opinion expressed in circular letters. There is a ruling by a German Fiscal Court that, as the European Law governing taxation makes no mention that a Tour Operator has to be within the EU for TOMS to apply, then the law itself may be invalid. This case is pending before the High Fiscal Court in Munich.
From 1st January 2027 the federal government in Germany are planning to impose a sales tax on German tourism product sold in non-EU markets. This will increase costs of German holidays to non-EU consumers by at least 10% once additional administrative costs are factored in.
The proposal has been postponed several times. In 2023, when the proposal was supposed to be implemented in 2024, the proposal affected demand, with some market segments reported to be avoiding German product altogether, or not promoting it. This came at a time when long-haul business was finally returning after COVID19, despite strong inflationary pressure, a fragile service sector, and faltering domestic demand.
If the change goes ahead, the impact on Germany-inbound operators and the supply chain will be severe, especially for those who specialise in long-haul markets.
The change is unnecessary. The EU is currently considering how best to handle VAT and tourism in the online and offline marketplace, and it is developing options with input from industry and experts.
The status quo means that the country in which the visitor enjoys the accommodation or other part of the tour received VAT revenue on those services. The service of packaging is enjoyed where the consumer (or other client) is based, so any tax liability arising on final sale should arise there.
The status quo also avoids the need for multiple VAT registration, allowing the tax benefit from tourism to be allocated fairly. The change will incur double taxation as EU inbound operators will be selling to non-EU operators VAT inclusive product on which the input VAT is non-recoverable.
Europe should not tax tourism exports such as a packaged tour sold in Japan or the US. Instead, it should encourage value-adding across the territory. Germany’s proposal does the opposite, adding uncertainty to a market with strong demand and alternative destinations to choose from.
ETOA continues to work with its partners to encourage Germany to take a more pragmatic view, remove market uncertainty, and suspending any change until an EU-wide solution is agreed.
