Evaluation of the Tour Operators Margin Scheme by the EU Commission

The Commission has launched an initiative to assess the efficiency and relevance of the TOMS scheme for tour operators and travel agents which allows them to account for VAT on their profit margin only in the Member State in which they are established. The scheme is over 40 years old and the evaluation will consider:

  • if and to what extent the special VAT scheme for travel agents is fit for purpose;
  • whether the scheme meets its objectives of having simplified rules for the sector;
  • whether the scheme ensures the VAT is collected by the EU country where the goods or services are consumed; and
  • whether the scheme is efficient in achieving the underlying needs in this field, and is still in line with changes in the overall policy, as well as other EU policy initiatives and priorities.

The Commission notes that its review is carried out in the context of developments such as the introduction of the one-stop-shop in 2021 and the shift to destination-based taxation. The feedback will be followed by a public consultation to which Member State authorities, businesses and the wider public may contribute.

DLA Piper comment: This is a very wide-ranging review of TOMS, and is welcome, as there is inconsistency in the operation of TOMS in the EU. TOMS has certainly aided tour operators in Member States as it has only required registration in the Member State of establishment, but there are discrepancies with non-EU operators avoiding registration and VAT liabilities. The 2021 EU Package should bring non-EU businesses supplying B2C services within the scope of EU VAT. The UK will be keeping a close eye on developments, as it contemplates what it should do after leaving the EU.

Commission Implementing Regulation on detailed technical rules on information collected under new VAT e-commerce rules published

Commission Implementing Regulation (EU) 2020/194 of 12 February 2020 laying down detailed rules for the application of Council Regulation (EU) No. 904/2010 as regards the special schemes for taxable persons supplying services to non-taxable persons, making distance sales of goods and certain domestic supplies of goods, was published in the Official Journal of the EU. These rules will enter into effect on 1 January 2021 to coincide with the expanded scope of the mini-one-stop-shop (MOSS) scheme. Taking into account the fact that a wider scope of transactions will be reported through the MOSS scheme (not only telecommunication, broadcasting and electronically supplied services, but other B2C services, and B2C supplies of goods), the amount of information collected and exchanged by Member States during the registration of taxable persons applying the scheme, and collected in the MOSS VAT returns, needed to be expanded as well.

E-commerce: Council adopts new rules for exchange of VAT payment data

The European Council adopted a set of rules to facilitate detection of tax fraud in cross-border, e-commerce transactions. The new measures, which will apply from 1 January 2024, consist of:

  • Amendments to require payment service providers to keep records of cross-border payments related to e-commerce. This data will then be made available to national tax authorities under strict conditions, including those related to data protection.
  • Amendments to set out the details of how national tax authorities will cooperate in this area to detect VAT fraud and control compliance with VAT obligations.

These measures will enable Member States to collect, in a harmonised way, the records made electronically available by payment service providers, such as banks. In addition, a new central electronic system will be set up for the storage of the payment information and for the further processing of this information by national anti-fraud officials.

DLA Piper comment: The measures are expected to increase the amount of data available to tax authorities as they seek to combat fraud and increase their tax take from VAT. The processing by sophisticated computer systems of data aids transparency, helps identify problem areas and supports the drive for compliance.