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.

Commission Communication “Towards a simpler, more robust and efficient VAT system tailored to the single market”

The aim of the Communication is to (i) set out the fundamental characteristics of the new VAT system for the EU and (ii) list the priority actions needed to create a simpler, more efficient and more robust VAT system in the EU. Among the actions envisaged are changes to the VAT rate structure (reduced VAT rates) and the place of supply of passenger transport services.

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, under 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 their own Member State. They have no right to deduct VAT on supplies made to them, but on the other hand they 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 ]
• Sale of opera tickets without the provision of supplementary services [ View Minervakulturreisen case ]

Other Court rulings relevant for travel service providers but not directly linked to the margin taxation scheme:

• Supply of services connected with immovable property – Services consisting in facilitating the exchange by owners of rights to occupy holiday homes (View RCI Europe case)
• Classification of deposits received for the provision of services which are subject to VAT and retained by the provider in the event of cancellation [ View Société thermale d'Eugénie-les-Bains case ]
• Place of taxation of goods effected on board ships [ View Köhler case ]
• Exemption of international air transport [ View Idéal Tourisme 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 Implementing Regulation 282/2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax

The Council implementing Regulation clarifies a number of provisions of the VAT Directive and in particular the place of supply rules which came into force, for the most part, in January 2010 and January 2011. The provisions contained therein concern all service suppliers, but some of them concern specifically suppliers of tourism services, including intermediaries

Directive 2010/88/EU amending Directive 2006/112/EC with regard to the duration of the obligation to respect a minimum standard rate
 
The Directive fixes the minimum standard rate of VAT applicable from 1 January 2011 to 31 December 2015 at 15%.
 
 [ View VAT rates in the EU Member States ]
 
Directive 2009/47/EC amending Directive 2006/112/EC as regards the reduced rates of value added tax
 
The Directive allows Member States - on a permanent basis - the optional use of reduced rates of value-added tax (VAT) for certain labour-intensive local services, including restaurant services, for which there is no risk of unfair competition between service providers in different Member States.