Brussels, 28/04/2016 (Agence Europe) - On Thursday 28 April, the European Commission decided to bring Germany before the Court of Justice of the EU on the grounds that the country is not correctly applying the specific VAT regime for travel agencies.
Despite a second call to order sent by the Commission to the German authorities on 24 September 2015, Germany has still not brought its legislation into line with the VAT Directive (2006/112/EC). This Directive stipulates the travel agencies must use their profit margin as the VAT tax base, irrespective of the client, including businesses, in order to create fair competition conditions between suppliers and eliminate competition distortions (judgements returned by the Court of Justice in 2013).
Despite this obligation, Germany is currently applying this regime exclusively to travel services supplied to private users. Furthermore, the German authorities also allow travel agencies to set a single profit margin for all package travel supplied during a tax declaration period. However, under the EU rules, travel agencies must calculate the net profit margin for each travel service and may not make a global calculation of the margins VAT purposes for each tax declaration period. (Original version in French by Maëlle Didion)