ETOA announces campaign on tax reform

On January 1, a series of new measures on the indirect taxation of travel services are coming into force throughout Europe.

On January 1, a series of new measures on the indirect taxation of travel services are coming into force throughout Europe. In the Republic of Ireland the margin on tourism services are to be taxed for the first time. In the UK, companies who sell to direct to consumers now have to apply the Tour Operators Margin Scheme (TOMS), while those who sell to other companies now have to โ€œopt out.โ€ On the same date, new rules come into effect on the collection of VAT on โ€œcross border services.โ€

Furthermore, a fresh round of negotiations on TOMS is expected to start in the first half of next year. Spain has said it is planning to include reform of TOMS in its EU Presidency agenda. Belgium, Hungary, and Poland are to follow and all are thought to be equally open to change.

This means tourism industry players, including trade associations like ETOA, have a potential two-year window for negotiations.

TOMS was intended to simplify the collection of tax on sales made in different national jurisdictions across Europe, but it has been widely criticized as complicated, unwieldy, and costly. It has made travel arranged through Europe-based operators less competitive compared with companies based outside the EU that are not subject to EU taxation laws.

Added to this, consumers can now easily purchase travel arrangements over the Internet from suppliers without regard to their location or taxation jurisdiction. This leaves TOMS as outdated and flawed.

John Boon of JAC Travel commented: โ€œThe application of tax on travel services is already so complicated that even accountants look frightened. On January 1, this complexity is going to be further scrambled with new regulations on Point of Sale. How is an industry to establish its competitiveness when its taxation is incomprehensible?โ€

ETOA has been a leading proponent of change to the TOMS scheme, and is launching a new bid for reform to coincide with the change in EU leadership in 2010.

ETOA will be featuring this topic prominently at its annual conference on November 5 in Central London. For more information please go to http://www.etoa.org/GEM_Conf.aspx.

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Linda Hohnholz

Editor in chief for eTurboNews based in the eTN HQ.

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