From: news@paragraf.nbg.sub.org
Newsgroups: de.soc.recht
Subject: JUS 9240.7.1 Taxation, Finance          
Date: Wed, 16 Dec 92 21:23:30 +0100
Organization: VDJ Nuernberg

ENR   : 2502
HD    : 7. Taxation, Monetary Policy, Finance
TI    : Judgment of the Court of Justice - sixth Directive 77/388/EEC - VAT -
        travel agencies - Germany
RF    : JUS 9240.7.1
AB    : Article 26 of the sixth Directive 77/388/EEC (common system of
        value added tax) provides for a particular scheme applicable to
        travel agencies if they act in their own name with regard to
        travellers, but use deliveries and services from other VAT taxable
        persons for the trip.
        By virtue of this scheme, the operations effected by the travel
        agency in the context of a trip are considered as a single service
        provided by the travel agency to the traveller. The tax base for
        this service is the travel agency's margin, that being the
        difference between the total amount to be paid by the traveller
        before VAT and the actual cost borne by the travel agency for the
        deliveries and services of other VAT taxable parties, in so far as
        these operations benefit the traveller directly (Article 26 (2) of
        Directive 77/388/EEC).
        If the operations for which the travel agency uses the services of
        other VAT taxable persons are carried out by persons outside of the
        Community, the services of the agency are assimilated to an
        intermediary activity exempt from VAT in virtue of Article 15 of
        the Directive. If these operations are carried out both inside and
        outside of the Community, only that part of the travel agency's
        services concerning operations effected outside of the Community
        can be considered exempt (Article 26 (3) of Directive 77/388/EEC).
        German legislation on the VAT scheme applicable to travel services
        (Article 25 of the Umsatzsteuergesetz: UStG 1980) allows exemption
        of certain operations carried out by third parties
        ("intermediaries") on behalf of travel agencies, not only when
        these operations are executed outside of the Community, but also
        when they concern the entire international air or sea transport
        operations or are carried out exclusively outside of the German
        fiscal territory. Considering that the method stipulated by German
        law for calculating VAT for travel agencies was incompatible with the
        sixth Directive 77/388/EEC, the Commission filed a suit against
        Germany for failure to meet its obligations before the Court of
        Justice. To support its suit, the Commission notably argued that only
        trips to non-member countries, or, when trips include travel both
        inside and outside of the Community, only that part of the trip which
        took place outside of the Community is excluded from the calculation
        of the travel agency's margin, which constitutes the tax base.
        According to the Commission, the tax base on travel agencies is
        abnormally reduced when operations carried out within the Community
        are excluded from the calculation of the tax in the case of air or
        maritime transport, and this can give rise to distortion of
        competition with regard to agencies in other Member States.
        On confirming the Commission's arguments, the Court of Justice
        observed that Germany had failed to meet its obligations under the
        EEC Treaty in that it applied a VAT fiscal scheme to the margin of
        travel agencies incompatible with Article 26 of the sixth Directive
        77/388/EEC.
        Judgment of the Court of Justice of 27 October 1992, case C-74/91
        Commission of the European Communities v. Federal Republic of
        Germany, not yet published.
CT    : Taxation; VAT
DT    : 921127
Newsgroups: de.soc.recht