ETOA’s fear over European VAT ruling
Travel wholesalers have said they will be forced to relocate outside the European Union if a VAT ruling by the European Court of Justice is implemented.
The European Tour Operators Association (ETOA) asked its members about the impact of the European Court of Justice ruling that wholesale travel transactions should fall within TOMS in the UK, made last September.
96% of the UK-based wholesalers who responded said the new ruling would damage their competitiveness and their ability to sell the UK as a destination, forcing them to relocate outside the EU.
Operators also said it would affect their ability to sell the UK.
Andrew Grieve, managing director of Discover Travel & Tours, said: "Operating in the UK (and Europe) will not be competitive and we will grow our investment in our US office and migrate our business outside the EU.
"We cannot operate and compete successfully in a global marketplace under an uncompetitive tax regime. Thousands of jobs in the European based inbound industry will be lost with this tax on exports. "
Previously TOMS did not apply if packages were being sold business to business in the UK.
The judgment also obliges wholesalers to reveal their gross margins to their clients and to account for taxation on a transaction-by-transaction basis.
One operator said: "it not only renders me uncompetitive, it makes me reveal how uncompetitive I am to my customer!"
Another said: "We deal with markets which are extremely price sensitive," said another operator, "like the Student and Indian markets.
"The Indian market accounts for almost 45% of our business: if we have to increase our prices then they will choose alternative destinations."
Tom Jenkins, chief executive of ETOA, said: "This taxation scheme (TOMS) is in dire need of reform: one of the shocking aspects of this judgement is that it grants tax free status to foreign holidays, whilst landing a new and substantial tax on our tourism exports."
Diane
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