# C_2005296EN.01000302.xml

| 26.11.2005 | EN | Official Journal of the European Union | C 296/3 |
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26.11.2005

EN

Official Journal of the European Union

C 296/3

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JUDGMENT OF THE COURT

JUDGMENT OF THE COURT

(Third Chamber)

of 6 October 2005

in Case C-291/03: Reference for a preliminary ruling from the VAT and Duties Tribunal, Manchester, MyTravel plc v Commissioners of Customs & Excise (1)

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(Sixth VAT Directive - Scheme for travel agents - Package tours - Services bought in from third parties and in-house services - Method of calculating the tax)

(2005/C 296/06)

Language of the case: English

In Case C-291/03: reference for a preliminary ruling under Article 234 EC from the VAT and Duties Tribunal, Manchester (United Kingdom), made by decision of 30 June 2003, received at the Court on 4 July 2003, in the proceedings between MyTravel plc and Commissioners of Customs & Excise — the Court (Third Chamber), composed of A. Rosas, President of the Chamber, A. Borg Barthet (Rapporteur), J.-P. Puissochet, S. von Bahr and U. Lõhmus, Judges; P. Léger, Advocate General; M. Ferreira, Principal Administrator, for the Registrar, gave a judgment on 6 October 2005, the operative part of which is as follows:

| 1. | A travel agent or a tour operator who has completed his value added tax return for a tax period using the method laid down by the national rules which transpose into domestic law Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment may recalculate his value added tax liability in accordance with the method held by the Court to comply with Community law, under the conditions laid down by national law, which have to observe the principles of equivalence and effectiveness. |
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1.

A travel agent or a tour operator who has completed his value added tax return for a tax period using the method laid down by the national rules which transpose into domestic law Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment may recalculate his value added tax liability in accordance with the method held by the Court to comply with Community law, under the conditions laid down by national law, which have to observe the principles of equivalence and effectiveness.

| 2. | Article 26 of Sixth Directive 77/388 must be interpreted as meaning that a travel agent or tour operator who, in return for a package price, supplies to a traveller services bought in from third parties and in-house services must, in principle, identify the part of the package corresponding to his in-house services on the basis of their market value where that value can be established. In such a case, a taxable person may use the criterion of actual costs only if he proves that this criterion accurately reflects the actual structure of the package. Application of the criterion of market value is not subject to the condition that it must be simpler than application of the actual cost method or to the condition that it must produce a value added tax liability identical or close to that which would result from using the actual cost method. Accordingly:






  — | a travel agent or tour operator may not use the market value method at his own discretion and |
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2.

Article 26 of Sixth Directive 77/388 must be interpreted as meaning that a travel agent or tour operator who, in return for a package price, supplies to a traveller services bought in from third parties and in-house services must, in principle, identify the part of the package corresponding to his in-house services on the basis of their market value where that value can be established. In such a case, a taxable person may use the criterion of actual costs only if he proves that this criterion accurately reflects the actual structure of the package. Application of the criterion of market value is not subject to the condition that it must be simpler than application of the actual cost method or to the condition that it must produce a value added tax liability identical or close to that which would result from using the actual cost method. Accordingly:

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a travel agent or tour operator may not use the market value method at his own discretion and

| — | that method is applicable to in-house services whose market value may be established even if, in the same tax period, the value of certain in-house components of the package cannot be established inasmuch as the taxable person does not sell similar services on a non-package basis. |
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that method is applicable to in-house services whose market value may be established even if, in the same tax period, the value of certain in-house components of the package cannot be established inasmuch as the taxable person does not sell similar services on a non-package basis.

| 3. | It is for the national tribunal to establish, in the light of the circumstances of the main proceedings, the market value of the flights supplied in the main proceedings as part of package holidays. The national tribunal may establish this market value from average values. In this context, the market based on seats sold to other tour operators may constitute the most appropriate market. |
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3.

It is for the national tribunal to establish, in the light of the circumstances of the main proceedings, the market value of the flights supplied in the main proceedings as part of package holidays. The national tribunal may establish this market value from average values. In this context, the market based on seats sold to other tour operators may constitute the most appropriate market.

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(1)  OJ C 213 of 06.09.2003.

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