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ECJ ruling on Travel Agents scheme

  • VAT
  • 15 September 2013 | Richard Asquith

ECJ ruling on Travel Agents scheme

The European Commission has a lost a major ruling on the running of the special Travel Agents VAT scheme. The European Court of Jusctice, the highest court of appeal for EU-related legal matters, struck down actions brought by the EC against Italy, Czech Republic, Greece, Finland, France, Spain and Portugal.

The EC had contented that the special scheme only applied to services offered directly the traveller (consumer). However, the above countries had been applying it to the wholesale markets too. It seems that the differences had come down to a simple translation problem between the EU VAT Directive and the local languages.

The ECJ found that the correct application should be the application of the scheme to the entire industry, so offering it wholesale to travel agents enables them to offer it on to the final consumer / traveller in an efficient manner.

The impact of this re-intepretation will be felt in the other 20-member states, which now have to apply the new interpreation. This will mean many hotels and other related services will be drawn into the Travel Agent Scheme. This will take away the advantage of them being able to recover input VAT certain costs.


VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.