Belgium drops VAT on travel agency services beyond EU

Tue 13th May 2014

The Belgian VAT office has last week confirmed that it will exempt from VAT travel agency services provided to Belgian customers for travel outside of the EU.

This new exemption will be retrospectively applied from 1 May 2014.

Tour Operators Margin Scheme VAT simplification

EU VAT for travel agents is a complex area since there are three typical business models:

  1. Intermediary for holiday firms
  2. Direct agent dealing with hotels, airlines etc
  3. Principle

The European Union offers a special VAT scheme for travel agents, known as Tour Operators Margin scheme (TOMS) where an agent is the intermediary or principle. In this role they buy-in and re-sell travel services, including accommodation. It aims to simplify VAT across Europe by offering an option to not VAT register in all the target countries. Instead of reclaiming and on-charging VAT, operators can instead just charge VAT on the profit margin they make.