Recent news

08 November 2021 | ETOA, together with its partners ETC, USTOA and CATO escalate their campaign to urge Germany to suspend proposed changes in VAT treatment pending EU-wide review, citing €100million annual loss to Germany. Statement here.

07 July 2021 | The ETOA launches public Impact Survey of proposed changes to the tax treatment of non-EU operators buying services in Germany. To complete survey, go to main Tax and Tourism page.

29 March 2021 | The German Ministry of Finance has issued a notification to say that the changes announced on 29th January to the tax treatment of non-EU operators buying services in Germany will be suspended, pending review, until the end of 2021. Notification (in German) available here. These changes would have prevented non-EU buyers being treated as if they were within the EU’s tour operators margin scheme (TOMS), potentially with retrospective effect.

11 March 2021 | ETOA understands that the German Ministry of Finance may be considering a suspension of the proposed change in treatment outlined below. We will publish any clarification or confirmation as soon as we have it.

01 February 2021 | On 29th January, Germany announced changes to VAT treatment requiring non-EU operators purchasing German product for re-sale to register for VAT in Germany. Ministry of Finance notification here. Link to ETOA’s expert webinar on this topic can be found here.

This page was last updated on 25th February 2021.

The situation remains ambiguous. Pending further clarification, what follows is ETOA’s understanding; alternative interpretations have been offered. 

Given the topic’s intricacy, it is likely to be an over-simplification. It is intended to characterise the situation, not offer advice. We welcome divergent expert comment or opinion at


It appears that Germany intends to extend VAT on tourism services enjoyed in Germany to include a levy on the margin added by non-EU tour operators.

Previously, for purchases by non-EU operators, Germany retained the ‘input VAT’ on tourism services such as accommodation and tickets. Any liability for VAT would be a matter for their country of establishment.

In effect, this treated non-EU operators as if they were within the EU, operating within the ‘Tour Operators Margin Scheme’ (TOMS).

The new treatment will affect the competitiveness of inbound German tourism from non-EU markets, due to additional costs and administrative complexity. The net effect will increase cost by between 5-10%, depending on the degree to which ‘input tax’ is recoverable and the VAT rate prevailing on the individual services bought.

Analysis and questions arising

  1. The statement of the German Finance Ministry on the 29th January reflects the principle that TOMS is a simplification not available to “entrepreneurs established in the third country and without a permanent establishment in the Community territory”.
  2. This represents a change in German policy as it previously took the view that third country entrepreneurs (i.e. non-EU) were covered by TOMS and were not taxable in the EU as they had no EU place of business.
  3. While the announcement may have been influenced by the UK’s new status as a non-EU source market, both B2B and B2C, the changes would affect operators worldwide.
  4. The statement implies a new requirement for such third country operators to register for input and output VAT. While such a requirement is not set out explicitly, there would be no reason for the statement unless the treatment had changed.
  5. If this new requirement is imposed, then – even allowing for relief on input taxation – the liability on a package in Germany would amount to 5-10% surcharge on the sale price to end consumer.
  6. Impact will vary from case to case. The obligation to collect and pay the tax would rest with every vendor in the supply chain; the German reverse charge regulations determine the obligations of each vendor.
  7. The statement adds: “For reasons of the protection of legitimate expectations it is not objectionable if TOMS is applied to travel services carried out by 31 December 2020.”
  8. It appears from this that no back tax will be claimed on services delivered last year. But the full implications are not clear: are services sold in 2019 for delivery in 2020, but which were delayed until 2021 or 2022, covered by “legitimate expectations”? Are services which were contracted (and perhaps paid for) last year for subsequent sale in 2021, and which have published prices, covered by the clause?
  9. German (or other EU) B2B operator must account for VAT under TOMS – the input tax is collected by the supplier and remitted to the German government. Their clients would not be able to reclaim the input tax on constituent components of the package they bought since recovery requires transaction-by-transaction accounting. Whereas, wholesalers outside the EU could reclaim input tax, and would be liable for VAT on the gross margin of the package they resold to a B2C operator.
  10. Benefit to German B2B operators would arise if the tax authorities proposed to take no further interest in the matter when TOMS had been applied by a German (or other EU) B2B operator. But this would appear to conflict with the intention expressed in the Ministry’s statement as anyone the German (or other EU) B2B operator sold on to would be liable for German VAT: they are no longer be allowed to function as if TOMS applies to them.

Clarification sought

  • Does the ministry expect every vendor in every non-EU market to register and pay VAT, irrespective of country of establishment or size of transaction?
  • Potential scope for retrospective effect as illustrated in point 8 above.
  • Whether clients of German B2B operators expected to register and consequently double tax their clients.
  • Whether data protection requirements may inhibit the operability and/or enforceability of the scheme.


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