TOMS Update-EU Member State VAT Registrations

Our German VAT contacts recently shared the news that the German Ministry of Finance does not consider the EU TOMS rules to apply to businesses established outside the EU. They are treating third country tour operators with effect from 1 January 2021, as subject to normal German rules so a registration is required. In simple terms, non-EU businesses (including those in the UK) would be required to register for German VAT and pay German output VAT when supplying travel in Germany. At the moment, this is an opinion only and cases are expected to follow in due course to confirm fully.

We have no real information yet on how other member states may react, and whether they may follow suit. However, clearly this is an important development and gives a very real risk of VAT registrations in multiple EU member states for UK tour operators. Other states could follow Germany’s decision in full course.

This is the one TOMS risk we all were aware of following Brexit, but one which we hoped would not happen at least for some time. At the moment there is still a great deal of uncertainty and so we are not yet advising businesses to spend what we imagine may be considerable resources in confirming their position EU-wide. However, we would advise some prudence and planning, and taking steps to estimate the possible exposure.
With this in mind, for those of you who sell travel services in the EU under TOMS, we would advise you to consider for each EU country in which your travel services take place:

  • The likely VAT payable in those countries – we would expect this to include confirming the likely VAT treatment and rates for sales, and the possibility of VAT recovery for purchases. Outside of TOMS, many EU countries have reduced rates for tourism services so overall VAT payable may be less than it previously was under UK/EU TOMS rules pre-2021.
  • The likely costs of compliance – this varies widely across the EU. In some countries the costs are similar to that in the UK, but in others can be considerable more, especially where a fiscal representative is required.
  • Ensure all purchase invoices you receive from suppliers are proper valid VAT invoices.

 
We have a network of travel VAT advisors from around the EU and can update on announcements and decisions from Member States, as well as make introductions where you need local help.

 
Our Head of VAT , Laura Chipp, can advise further and is offering a limited number of one on one consultations throughout February on how Brexit affects your business on a pre-booked basis at £150+VAT. To make an appointment, contact Laura at laura.chipp@elmanwall.co.uk

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