The most important taxation matters dealt with by ECTAA concern:

• Main VAT legislation
• Margin taxation scheme
• Revision of the margin taxation scheme
• Revision of the rules determining the place of taxation
• Simplification of the VAT obligations
• VAT rates
• Solidarity tax on airline tickets
  

Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (Former 6th VAT Directive, 77/388/EEC)

Council Directive 2006/112/EC is a recast of the 6th VAT Directive of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (77/388/EEC). It is the main body of European VAT legislation.

Articles 306-310 of Council Directive 2006/112/EC (former Article 26 of the 6th VAT Directive) provides a special VAT scheme for travel service providers, the so-called margin taxation scheme. Under the special margin scheme all transactions performed by the travel service providers in respect of a single travel package are treated as a single supply of services for VAT purposes, taxable in his own Member State. He has no right to deduct VAT on supplies made to him, but on the other hand he is only taxed on the profit margin realized on the supply of the travel package.

The Court of Justice of the European Communities has ruled in a number of instances on the interpretation of the various provisions of the margin taxation scheme, notably:

• Application of margin taxation scheme  [ View Van Ginkel case ]
• Place of taxation [ View DFDS ruling ]
• Application of margin taxation scheme and basis of calculation [ View Madgett and Baldwin case ]
• Method for calculating the tax for in-house services [ View My Travel case ]
• Principal and ancillary services [ View ISt case ]
• Discounts - total amount to be paid by the traveler [ View First Choice Holidays case ]

Council Directive 2008/8/EC of 12th February 2008 as regards the place of supply of services 
 
From 1st January 2010, the new place of supply of services will mean that business-to-business supplies of services will be taxed where the customer is situated, rather than where the supplier is located. For business-to-consumer supplies of services, the place of taxation will continue to be where the supplier is established. However, there will be a number of exceptions to reflect the principle of taxation at the place of consumption. This includes the majority of travel services.

[ View current / new place of supply rules for travel services]

Council Directive 2005/92/EC of 12 December 2005 amending Directive 77/388/EEC with regard to the length of time during which the minimum standard rate of VAT is to be applied

Directive 2005/92/EC fixes the minimum standard rate of VAT applicable from 1 January 2006 to 31 December 2010 at 15%.
 
 [ View VAT rates in the EU Member States ]

Proposal for a Council Directive amending Directive 2006/142/EC as regards the value added tax, COM (2008) 428

The Commission has presented a proposal allowing Member States as from 1st January 2011 to include on a permanent basis labor-intensive services and locally supplied services, including restaurant and catering services into annex III (list of services eligible to apply the reduced VAT rate).
A more indepth review of the whole structure of reduced VAT rates will follow at a later stage

[ view position of ECTAA ]