CJEU: Special VAT scheme applicable to travel agents also in case of mere resale of accommodation services
In its decision of 29 June 2023, case C-108/22, Dyrektor Krajowej Informacji Skarbowej, the CJEU confirmed the applicability of the special VAT scheme for tourist agents in the case where a taxable person purchases accommodation services from a third party and resells them on its own behalf without ancillary services.
Underlying case
“C” – as a “hotel service consolidator” – offers the possibility of booking accommodation services in hotels and other establishments. “C” purchases accommodation services from third parties and resells them on its own behalf to its customers. “C” also provides advice on the choice of accommodation and help with travel arrangements. However, in most cases, “C” only provides the accommodation service.
The matter in dispute was whether, in such a case, the special VAT scheme for tourist agents within the meaning of Article 306 of the VAT Directive applies to the provision of accommodation services that are not connected with other ancillary services.
CJEU ruling
The CJEU clarifies that the special VAT scheme for tourist agents is applicable even if the taxable person’s service includes only accommodation, provided that this service has been purchased from a third party and is resold on the taxable person’s own behalf. Exempting the special VAT scheme for tourist agents for the provision of (only) accommodation services would lead to a complex tax scheme that would fail to comply with the aims of the VAT Directive.
Implications in practice
As of 1 January 2022, the special VAT scheme for tourist services pursuant to section 23 Austrian VAT Act (Umsatzsteuergesetz) is also applicable to tourist services provided to a taxable person (B2B). Therefore, if a group company established in Austria purchases accommodation services from a third party and resells/provides the accommodation services to another group company, the accommodation service provided by the Austrian group company is subject to the special VAT scheme for tourist services. The tourist service is performed at the place from which the taxable person providing the service operates their business. If the tourist service is performed by a fixed establishment, the place where the fixed establishment is established is considered the place of supply. As a result, VAT registration obligations in other countries are avoided. The accommodation service without being combined with ancillary services of the Austrian group company is subject to margin taxation in Austria. The Austrian group company is not entitled to deduct input VAT with regard to the purchased tourist services (accommodation service from the third party).
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