German VAT Update March 2022

Germany is proposing to levy a tax on operators selling German tourism product outside the EU. This means that the Tour Operators Margin Scheme (TOMS) will no longer apply to these countries.

Scheduled for implementation on January 1st 2023, it imposes a burdensome clerical and financial obligation on businesses based outside of the EU. The implication is that they will have to register, reclaim input tax and charge output tax on German services. This will have a substantial financial impact and present an array of compliance issues.

As a consequence, the operational and financial cost of doing business with German suppliers will increase, possibly rendering German wholesalers uncompetitive.