Edited by Davide Accorsi, Pier Francesco Berardinelli
The Court of Justice of the European Union has recently clarified that the purchase of airline tickets and the subsequent resale to final consumers fall under the scope of the special VAT regime for tours operators (“TOMS”) even when the supply is not combined with additional services other than those of information and advice offered by the travel agent (case C-763/23, Dragoram Tour, June 25, 2024).
The “TOMS” (an acronym for Tour Operators’ Margin Scheme) is a special VAT regime regulated, at the EU level, by Articles 306 to 310 of Directive no. 2006/112/EC and implemented in Italy by Article 74-ter of Presidential Decree no. 633/1972.
According to these provisions and provided specific requirements are met, travel agents may calculate the VAT taxable amount of outbound transactions by subtracting the costs incurred, gross of input VAT, from the consideration received. Consequently, input VAT is not deductible.
In the case at hand, a travel agency resident in Romania purchased tickets for flights within the European Union from airlines and resold them with a mark-up to final consumers. The application of TOMS to this flow by the agency was challenged by the Romanian tax authorities.
Invoked to define the perimeter of application of the special scheme, the CJEU held that the mere provision of passenger transport services purchased from third party taxable persons by a travel agency falls within the scope of the TOMS regardless of the fact that such a transaction is not combined with additional services or that the agency also provides information and advices to its customers.
This judgment appears to follow on from some previous rulings of the CJEU. In particular, the European court had already opened up the possibility of applying the TOMS to individually provided services (see case C-553/17, Alpenchalets Resorts, February 18, 2019; case C-108/22, C. sp. z o.o., June 29, 2023) and had highlighted the relevance, for the applicability of the special regime, of information and advices provided by agencies (see case C-163/91, Van Ginkel Waddinxveen, November 12, 1992; case C-220/11, Star Coaches, March 1, 2012).
However, the principles expressed by the CJEU seem not to be entirely in line with the Italian legal framework. In fact, although not expressly provided for at the European level, the national legislator has limited the applicability of the special regime only to the supply of “tourist packages”.
Defined for tax purposes by Article 1 of Ministerial Decree no. 340/1999 as the combination of at least two of (a) transport, (b) accommodation and (c) tourist services not ancillary to transport or accommodation, which constitute a significant part of the tourist package, provided that the duration of the services is longer than twenty-four hours or extends for at least one night.
In addition, through Circular no. 328/E/1997, the Italian tax authorities clarified that the TOMS “is not applicable to cases in which the activity performed by the agency is limited to a single service such as mere transport or the provision of only accommodation or the performance of a single tourist service without there being a combination of at least two of the aforementioned services”.
This opinion has been confirmed by the Italian Court of Cassation, according to which “in the field of VAT, the special regime established for travel agencies by Article 74-ter of Presidential Decree no. 633 of 1972 does not apply when the agency […] provides single tourist services, unrelated to the organization of the trip” (judgment no. 4776 of March 11, 2016).
Travel agencies operating in Italy must therefore continue to carefully assess the applicability of the TOMS to services offered in Italy, also in view of the discrepancies between the EU and national legal frameworks.
For the sake of completeness, it is worth noting that paragraph 5-bis of Article 74-ter of Presidential Decree no. 633/1972 extends the applicability of the special regime to individual tourist services (not constituting “tourist packages”), provided that the latter are acquired in the agency’s possession prior to a specific request by the customer (e.g., allotment contracts).
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