Posted: 24 Jan. 2022 5 min. read

Changes in the VAT treatment of travel services

Overview

After a longer planning phase, the changes in the Austrian VAT law regarding travel services have now entered into force as of 1 January 2022. As part of the annual revision of the VAT Guidelines, the view of the tax authorities on travel services were also adapted to reflect the new legal situation. In addition, current ECJ case law has been incorporated.

Legislative changes

The Austrian VAT Act contains a special provision for the VAT treatment of travel services. Essentially, the margin between the outgoing and incoming services is taxed and the input VAT deduction as regards the incoming services is not allowed. An infringement procedure has been initiated, as the Austrian provision was not fully in line with the Union legal basis - the VAT Directive. The following necessary legislative changes have now entered into force as of 1 January 2022:

  • The margin taxation also applies to services provided to taxable persons.
  • The assessment basis is determined on the basis of individual margins, instead of a flat-rate determination of margins.

Amendments 2021 to the Austrian VAT Guidelines

In the course of the amendments to the Austrian VAT Guidelines in 2021, the legislative changes were also incorporated into the Austrian VAT Guidelines. Furthermore, adjustments were made for the sake of clarification or to incorporate case law. In the following  we provide an overview of selected amendments:

  • Calculation of the margin: Regarding the margin calculation, the individual travel services have to be taken into account, ie the margin has to be determined for each individual travel participant. If the amount of the tax base for sales or received tour prices cannot be definitively calculated for a reporting period yet, eg due to guarantee contracts for advance travel services, it must be estimated on the basis of the calculation of the individual trips. As soon as the information required for the final calculation is available to the taxable person, the margin calculation for the relevant assessment period has to be adjusted.

  • Down payments: Previously, the tax authorities allowed a tolerance rule to be applied to down payments - specifically, down payments which did not exceed 35 % of the overall service price did not have to be taxed. This regulation has been abolished. Now, down payments have to be taxed if the taxable person receives a down payment from the customer prior to the performance of a sufficiently determined travel service (date and destination of the trip are fixed).

  • Trade fairs and congresses: The special provision for travel services does not apply to the granting of admission tickets to trade fairs and congresses and related transportation, catering and accommodation services provided by the organizer as a single service, since in this case the relevant content of the service does not concern the organization of a trip.

  • Own services: Own services - which are taxable according to the general provisions of the Austrian VAT Act – are presumed, for example, if a whole accommodation, such as a hotel, is rented by a tour operator in order to provide accommodation and catering services to customers with its own staff and equipment.

Conclusion

There are significant changes in the area of travel services as of 2022. If a taxable person provides travel services (even if only in the context of company outings), it is advisable to carry out a detailed VAT analysis. In addition to the legislative changes, the far-reaching adjustments of the VAT Guidelines must also be considered. 


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Mag. (FH) Verena Gabler

Mag. (FH) Verena Gabler

Partner Steuerberatung | Deloitte Österreich

Verena Gabler ist Partner im Bereich Steuerberatung und leitet die Tax Management Consulting Abteilung bei Deloitte Österreich. Die Umsatzsteuer-Spezialistin hat sich auf die Prozessberatung spezialisiert und unterstützt ihre Klienten bei der Entwicklung und Implementierung von Steuerkontrollsystemen. Dabei begleitet sie ihre Klienten bei der Analyse und Reduktion von steuerlich relevanten Risiken, der Optimierung von Prozessen und der Erhöhung des Automatisierungsgrades der Steuerfunktion durch den Einsatz von steuerrelevanter Software.