The European Commission today announced it has referred Austria to the Court of Justice of the European Union (CJEU) for Austria’s failure to apply special value added tax (VAT) rules for travel agents correctly.
As noted in the EC release, the special VAT rules for travel agents means that VAT is to be applied only on the margins made from sales of travel services to consumers. Travel agents cannot deduct the amount of VAT they pay while buying services from other businesses. However, the EC found that Austria does not correctly apply this rule because it currently excludes travel services sold to other businesses from the regime. This exclusion is not allowed under current EU rules.
The EC also found Austria infringes on this provision (VAT Directive, Council Directive 2006/112/EC) by calculating the VAT to be paid by travel agents on an overall turnover within a tax period. EU case law provides that the taxable amount must be defined for each individual sale—and not calculated on the basis of a group of sales.
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