How tourism is taxed is the most influential factor on business viability. The added value of intermediation is often poorly understood. 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 local taxes have increased significantly.

For more information on overnight and day taxes, click here.

The cumulative effect of tax is critical. The increase in devolved tax-raising powers through overnight taxes and access charges was noted as a significant factor in competitiveness by the OECD in 2014. Visitors typically do not vote and they are any easy source of revenue. They do notice both price and service level, and they have a choice.

The Tour Operators Margin Scheme (TOMS) remains an intelligent simplification: it shares tax benefit between destination and operator’s country of establishment; it minimises the need for multiple registration; it is relatively easy to administer. However, it still taxes exports to non-EU clients, and provides a competitive advantage to non-EU businesses selling EU product. Relocation is often not open to small businesses on whose success tourism’s job generation depends. There is very little volume in retail sales of EU travel product to non-EU consumers.

What you need to know

  • The EU is reviewing how TOMS should operate: significant change is likely
  • There is an urgent need to illustrate the impact of options on business
  • Local taxes are becoming a more significant source of revenue

Reform of TOMS

November 2019: The European Commission is about to publish a new consultation on how the current system might evolve. The latest technical document summarising developments to date, current position and scope of review is available.


ETOA’s policy objectives

  • Sales to non-EU clients to be VAT-free
  • Tax matched by reciprocal benefit enjoyed by residents and visitors
  • 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.

Tourism tax rates

Find the city and local tax rates for over 125 selected destinations


Learn more

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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