Brussels, 18/02/2002 (Agence Europe) - The European Commission has presented a new VAT regime for travel operators selling package holidays to destinations within the European Union. The Commission proposes to allow travel agents to opt for the application of the normal VAT rule or on their profit margins. Applying VAT to profit margins rather than full value of sales will be useful for operators making sales to other agents rather than to the public, notes the Commission. The rule will become compulsory in Denmark, Ireland and the Netherlands, which exempted the supply of package holiday by travel agents from VAT. The new scheme will also apply to organisers of package holidays in the EU which are based outside the EU and which will now have to pay VAT in the Member State in which the holidays are taken. The Commission's proposal defines the concept of profit margins and authorises travel agents to calculate profit margins on the total of package holidays sold over a given period of time. "This proposal would crate a level playing field for travel agents in Europe and eliminate competitive distortions", said Commissioner Frits Bolkestein, in a press release, adding "I welcome the support of European travel agents' organisations for the proposal".