As from 1 January 2022, the Tour Operators Margin Scheme (TOMS) in Austria is extended to apply to VAT-registered businesses as recipients (i.e., B2B supplies) and changes are made to the VAT base for tour operators. The changes were made as a result of a decision of the Court of Justice of the European Union (CJEU) issued on 27 January 2021.
TOMS is a special VAT regime in the EU VAT directive that is designed to simplify VAT compliance for tour operators. Under this scheme, tour operators purchasing travel services in the EU in their own name may not deduct input VAT incurred on purchases (e.g., purchased accommodation or passenger transport services) from other businesses and, hence, are unable to recover input VAT incurred on such purchases. In return, tour operators do not have to account for VAT on their full output turnover but only on the difference between the costs incurred on purchased travel services and the sales price (i.e., the margin) in the EU member state in which the taxable person is established.
Previously, Austria applied TOMS only for travel packages sold to private consumers (i.e., B2C transactions), with the normal VAT rules applying to B2B transactions. The CJEU determined that this approach was contrary to EU VAT law and, therefore, the TOMS scheme is extended to all types of customers with effect from 2022. The changes also affect foreign tour operators, which will no longer be entitled to an input VAT deduction in Austria if they purchase tourism services, such as accommodation, passenger transport, etc. in Austria for resale purposes. At the same time, the obligation to tax the output supply in Austria is waived under TOMS.
In addition to extending TOMS to B2B transactions, the calculation of tour operators’ VAT base is revised as from 1 January 2022. A simplified calculation of the margin is no longer allowed; instead, tour operators must determine the taxable amount for each travel package sold.
No changes have been made for company business trips to Austria, and an input VAT deduction is still allowed if the services are purchased directly from the supplier and for the business’ own personnel (i.e., no resale to another party). However, businesses should take into account that they will receive a TOMS invoice without VAT if they acquire travel packages from tour operators and, therefore, no input VAT deduction will be possible in this situation.