Commissioners of Customs & Excise v First Choice Holidays plc.
Date: 2003-06-19
21.  Article 26 of the Sixth Directive introduces an exception to the general rules on the taxable amount with respect to certain operations of travel agents and tour operators (Joined Cases C-308/96 and C-94/97   Madgett and Baldwin   [1998] ECR I-6229, paragraph 5).
22.  As an exception to the normal rules of the Sixth Directive, Article 26 must be applied only to the extent necessary to achieve its objective (Madgett and Baldwin  , paragraph 34).
23.  The objective of the special VAT scheme introduced by Article 26 of the Sixth Directive is to adapt the applicable rules to the specific nature of the activity of travel agents and tour operators (Case C-163/91   Van Ginkel   [1992] ECR I-5723, paragraph 15, and   Madgett and Baldwin  , paragraph 18).
24.  The services provided by such undertakings most frequently consist of multiple services, in particular transport and accommodation, supplied either within or outside the territories of the Member State in which the undertaking has established its business or has a fixed establishment.  The application of the normal rules on place of taxation, taxable amount and deduction of input tax would, by reason of the multiplicity of services and the places in which they are provided, entail practical difficulties for those undertakings of such a nature as to obstruct their operations (Van Ginkel  , paragraphs 13 and 14, and   Madgett and Baldwin  , paragraph 18).
25.  By laying down a single place of taxation and using as the taxable amount for VAT the travel agent's or tour operator's margin, that is to say the difference between the   "total amount to be paid by the traveller"   exclusive of VAT and the actual cost, including VAT, to the travel agent or tour operator of supplies and services provided by other taxable persons, Article 26(2) of the Sixth Directive is designed to avert the difficulties referred to in the previous paragraph and especially to provide a simplified method of deducting input tax, whichever the Member State in which it was collected.
26.  The attainment of that objective in no way requires any derogation from the rule laid down in Article 11A(1)(a) of the Sixth Directive which, for the purposes for determining the taxable amount, refers to   "the consideration which has been or is to be obtained by the supplier from the ... customer or a third party"  .
28.  In that context, the words   "to be paid by the traveller"   used in Article 26(2) cannot be interpreted literally as meaning that they exclude from the taxable amount for VAT part of the   "consideration"   obtained from a third party within the meaning of Article 11A(1)(a).
29.  The   "consideration"   referred to in Article 11A(1)(a) is the subjective value, that is to say, the value actually received in each specific case (Case C-288/94   Argos Distributors   [1996] ECR I-5311, paragraph 16, and Case C-317/94   Elida Gibbs   [1996] ECR I-5339, paragraph 27).
30.  The taxable amount for a service is everything which makes up the consideration for the service, and there must therefore be a direct link between the service and the consideration received (see,   inter alia,   Case 230/87   Naturally Yours Cosmetics   [1988] ECR 6365, paragraph 11).
31.  That link must therefore also be present where part of the consideration is obtained from a third party.