November 29, 2021 – Tourism and tax – Germany and VAT

On 24th November, news started to circulate that the proposed change in VAT treatment of non-EU agents and operators has been further postponed to 1st January 2023.

At time of writing, we await official notification from the Federal Finance Ministry, but this move has been expected. A letter received by ETOA from the Ministry last week indicated that ‘discussions were continuing’.

Tourism and tax

It was clear from our lobbying activity that both inbound associations and regional governments were very concerned. This represents a success for a concerted lobbying effort: postponement a pragmatic and politically palatable option. But the goal is still to ensure that all EU states await an EU-wide resolution. Maintaining European competitiveness in its source markets remains a core ETOA priority.

Assuming implementation is delayed, there is still much to do. The good news is that product delivered during 2022 will not be subject to new sales tax, and the requirement for VAT registration is less urgent. However, operators and agents preparing programmes and product for 2023 still face the same commercial uncertainty. Will sales made in 2022 for product delivered in 2023 be subject to a new tax? We await confirmation. 2023 is widely expected to be the year when recovery is consolidated. Unnecessary obstacles must be avoided.

In the new year, we understand that the European Commission intends to conduct another short study on various options for VAT and tourism ahead of a legislative proposal in 2023. Unilateral changes introduced meanwhile could be counter-productive, even if they were enforceable. How any country would justify the cost of the administrative resources needed to engage in tax collection on a global basis is an open question. It ought to be an easy question to answer if a consequence of the regime requiring such resources would be a net loss of tax revenue. ETOA’s latest position paper is available here.


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