Proposal for a Council Directive amending Directive 77/388/EEC as regards the special scheme for travel agents
Date: 2002-02-08
Institutions: European Commission
Subjects: VAT, fiscal policy, tax system, travel agency

C 126 E/390

EN

Official Journal of the European Communities

28.5.2002

Proposal for a Council Directive amending Directive 77/388/EEC as regards the special scheme for
travel agents

(2002/C 126 E/16)

COM(2002) 64 final — 2002/0041(CNS)

(Submitted by the Commission on 8 February 2002)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European
Community, and in particular Article 93 thereof,

Having regard to the proposal from the Commission,

Having regard to the opinion of the European Parliament,

(5) Due to the special nature of the services supplied by travel
agents, which purchase different services from third parties,
combine them into a travel package and then sell these
packages,
for travel agents to
determine their profit margin for each separate supply. A
system allowing them to calculate a global profit margin
over a certain period of time would simplify the system
and could solve many of their problems in this field.

is often very difficult

it

Having regard to the opinion of the Economic and Social
Committee,

(6) For similar reasons travel agents should be allowed to opt
for the normal VAT arrangements in order to ensure the
principle of neutrality of the VAT.

Whereas:

(1) According to the Commission's Communication to the
‘A Strategy to
Council and the European Parliament
the Internal Market’ (1), a
improve the functioning of
more uniform application of the community provisions
by Member States
for
improving the functioning of the Internal Market in the
short term.

the four objectives

is one of

(2) Member States currently apply different interpretations of
the special scheme for travel agents, as set out in Article 26
of the 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
last
added tax: uniform basis of
2001/41/EC (3),
amended
by Directive
in
different application of
scheme in the different
that
Member States and leading to distortion of competition
for certain operators.

as
resulting

assessment (2),

(3) Extending its

supplies of

scope to include all

travel
packages under the conditions of Article 26 of Directive
77/388/EEC would eliminate the different interpretations
given by Member States to the supplies covered by this
special scheme and ensure that the original objective of
taxation in the Member State of consumption is better met.

of Directive

in Article 26a

(4) A similar scheme whereby the profit margin is taxed is set
77/388/EEC for
out
second-hand goods, works of art, collectors'
items and
antiques. That Article contains detailed definitions, which
could be used to clarify the definitions in Article 26 and
simplify the application of the special scheme for travel
agents.

(7) Existing derogations under Article 28(3) and Annexes E
and F should be abolished in order to ensure a more
uniform application of
travel
agents. Similarly Article 28(3)(g)
and Article 15(14)
should be deleted as they also allow Member States to
apply divergent
travel
agents.

rules for taxing the services of

scheme for

the special

(8) Council Decision upon request of the Kingdom of Belgium
of 13 September 1978, granting to the Kingdom of
Belgium a derogation under Article 27(1)
should be
repealed in order to ensure a more harmonised application
of the special scheme of travel agents.

(9) Directive 77/388/EEC should therefore be

amended

accordingly,

HAS ADOPTED THIS DIRECTIVE:

Article 1

Directive 77/388/EEC is amended as follows:

1. Article 26 is replaced by the following:

‘Article 26

(1) Communication from the Commission to the Council and the
European Parliament — A Strategy to improve the operation of
the VAT system within the context of
the Internal Market
(COM(2000) 348 final of 7.6.2000).

(2) OJ L 145, 13.6.1977, p. 1.
(3) OJ L 22, 24.1.2001, p. 17 and corrigendum OJ L 26, 27.1.2001,

p. 40.

Special scheme for travel agents

1. Member States shall apply a special value added tax
scheme to the operations of travel agents in accordance
with the provisions of this Article, where the travel agents
deal with customers in their own name and use the supplies
of goods and services of other taxable persons in the
provision of travel facilities.

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Official Journal of the European Communities

C 126 E/391

That scheme shall not apply to travel agents, who are acting
only as intermediaries and accounting for tax in accordance
with Article 11(A)(3)(c).

must submit
replaced by Article 28 (h).

the return referred to in Article 22(4), as

For the purposes of this Article, tour operators and any
other taxable person who supplies travel services in the
same way shall be considered as travel agents.

All

transactions performed by the travel agent
the conditions set out

in
2.
respect of a journey under
in
paragraph 1 shall be treated as a single service supplied
by the travel agent. That single service shall be taxable in
the Member State in which the travel agent has established
his business or has a fixed establishment from which the
travel agent has provided the services.

When the travel agent is not established in the Community
or has a fixed establishment outside the Community from
where the service is supplied and he supplies a travel service
the effective use and enjoyment of which takes place within
the Community, the single service shall be taxable at the
place where the customer has established his business or
has a fixed establishment to which the service is supplied or
in the absence of such a place, the place where he has his
permanent address or usually resides.

3.
The taxable amount of the single service supplied by
the travel agent shall be the profit margin made by the
travel agent, less the amount of value added tax included
in the profit margin. That profit margin shall be equal to
the difference between the selling price charged by the
travel agent for a travel package and the actual cost to
the travel agent of this travel package. For the purposes
of this paragraph, the following definitions shall apply:

(a) selling price means everything which constitutes the
consideration, which has been, or is to be, obtained
by the travel agent
from his customer or a third
party, including subsidies directly linked to that trans-
action, taxes, duties,
levies and charges and incidental
expenses
such as commission and insurance costs
to the customer but
charged by the travel agent
excluding the amounts referred to in Article 11(A)(3),

(b) actual cost of

the travel package means everything
which constitutes the consideration, defined in the first
indent, including VAT, obtained or to be obtained from
the travel agent by his taxable suppliers, for the supplies
and services provided to him, where these transactions
are for the direct benefit of the customer excluding
overhead costs used to compose the travel package.

In that event, the taxable amount for the supplies of travel
services shall be the total margin made by the travel agent
less the amount of value added tax included in that margin.

The total margin shall be equal to the difference between:

(a) the total amount of supplies of travel services subject to
the special arrangements for taxing the margin effected
by the travel agent during the period; that amount shall
to the total selling prices determined in
be equal
accordance with paragraph 3, and

(b) the total amount of purchases of goods and services as
referred to in paragraph 1, effected during that period,
by the travel agent; that amount shall be equal to the
total
costs determined in accordance with
actual
paragraph 3.

5.
If transactions entrusted by the travel agent to other
taxable persons are performed by such persons outside the
Community, the travel agent's service shall be treated as an
exempted intermediary activity under Article 15(14).

Where those transactions are performed both inside and
the travel
outside the Community, only that part of
the
to
agent's
Community may be exempted.

transactions

relating

outside

service

6.
Tax charged to the travel agent by another taxable
person on the transactions described in paragraph 2,
which are for
the travel agent's
customer, shall not be eligible for deduction or refund in
any Member State.

the direct benefit of

7.
The travel agent may apply the normal value added
tax arrangements to any supply covered by the special
arrangements for taxing the margin.

8. Where the travel agent applies the normal value added
tax arrangements to the supply of a travel service, he shall
be entitled to deduct from his tax liability the value added
tax due or paid for the services supplied to him by his
the direct
suppliers, where these transactions are for
benefit of his customer.

The right to deduct shall arise at the time when the tax due
for the supply in respect of which the travel agent opts for
application of the normal value added tax arrangements
become chargeable.

In order to simplify the procedure for charging the tax
4.
and subject to the consultation of the VAT Committee,
Member States may provide that the taxable amount of
supplies of all
special
services
arrangements for taxing the margin shall be determined
globally for each tax period during which the travel agent

to the

subject

travel

for

value

9. Where the travel agent is led to apply both the normal
arrangements
special
arrangements for taxing the margin, the travel agent must
follow separately in his accounts the transactions falling
under each of these arrangements, according to rules laid
down by the Member States.’

added tax

and the

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Official Journal of the European Communities

28.5.2002

2. In Article 15(14) the second subparagraph is deleted;

Directive by 1 January 2003 at
forthwith inform the Commission thereof.

the latest. They shall

3. In Article 28(3) point (g) is deleted;

4. In Annex E point 15 is deleted;

5. In Annex F point 27 is deleted.

Article 2

When Member States adopt those provisions, they shall contain
a reference to this Directive or be accompanied by such a
reference on the occasion of
their official publication.
Member States shall determine how such reference is to be
made.

Council decision upon request of the Kingdom of Belgium of
13 September 1978, granting to the Kingdom of Belgium a
derogation under Article 27(1) of Directive 77/388/EEC is
repealed.

Article 4

This Directive shall enter into force on the twentieth day
following that of its publication in the Official Journal of the
European Communities.

Article 3

Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this

Article 5

This Directive is addressed to the Member States.