I am informed by the Revenue Commissioners that Section 88 of the VAT Consolidation Act 2010 provides for a scheme for travel agents known as the Travel Agents Margin Scheme (TAMS). The scheme deals with the activities carried on by travel agents who act in the capacity of a principal when supplying certain travel services such as transport, accommodation, etc, which they have bought in from third parties for onward supply to travellers. Under the scheme, which is provided for in the EU VAT Directive, such travel agents are liable to VAT at the standard rate in respect of the margin on their supply of travel services, not in respect of the overall consideration they receive for such services. The scheme, which was introduced with effect from 1 January 2010, operates in all EU States.
Supplies of travel services, e.g. accommodation, transport, etc., between travel agents, known as wholesale supplies, are not covered by the Margin Scheme but are subject to VAT at the rates applicable to those services in the normal way. If a travel agent established in Ireland acquires accommodation services from another travel agent, also established in Ireland, that other travel agent will charge VAT on the supply at the second reduced rate, currently 9%. The travel agent who acquires the accommodation and supplies it to a traveller will charge VAT on the margin at the standard rate, currently 23%.
If a travel agent in Ireland acquires accommodation services from a UK based agent, then that UK travel agent must register for VAT in Ireland and charge Irish VAT on all such supplies regardless of value. The Irish travel agent who acquires the accommodation and supplies it to a traveller will charge VAT on the margin.
In relation to wholesale supplies described above, the same VAT treatment applies to the supplies made by both the travel agent established in Ireland and the agent established in the UK. Therefore, the question of a competitive advantage should not arise. If the Deputy believes this is not the case I suggest that he provide the details to the Revenue Commissioners.