The European Commission has formally requested that Germany amend its VAT legislation on the application of the special scheme for travel agents.
The scheme allows the travel agent to set a so-called "price margin" (the difference between the actual cost to the agent and the total amount, exclusive of VAT, to be paid by a traveller) as the taxable amount for VAT. According to current German VAT law, this margin scheme can be applied only to travel services provided to private end users. It also allows travel agents to set one single profit margin for all supplies of travel packages sold during a tax period.
Following a judgement against Spain on its implementation of the same scheme on September 2013, the Court of Justice of the European Union decided that this special scheme is applicable not only to private travellers, but also to all customers, including businesses. Furthermore, the travel agent should calculate the margin per travel service, and is not allowed to make an overall calculation of the VAT margins per tax declaration period. The Commission's request takes the form of a reasoned opinion. In the absence of a satisfactory response within two months, the Commission may refer Germany to the Court of Justice of the EU.
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