Léim ar aghaidh chuig an bpríomhábhar
Gnáthamharc

Tax Code

Dáil Éireann Debate, Wednesday - 23 May 2012

Wednesday, 23 May 2012

Ceisteanna (85)

Sean Fleming

Ceist:

83 Deputy Sean Fleming asked the Minister for Finance if he will re-examine the VAT legislation with a view to making changes to eliminate the situation whereby certain tour operators are having to pay VAT twice on the same product for example, operators who provide a package for premiership league matches in the UK have to pay VAT in the UK on hotel rooms and match tickets which they cannot reclaim either in the UK or in Ireland and also have to pay VAT of 23% on their margin in Ireland, part of which package has already incurred VAT in the UK; and if he will make a statement on the matter. [25851/12]

Amharc ar fhreagra

Freagraí scríofa

Provisions covering the Travel AgentsMargin Scheme are contained in Section 88 of the VAT Consolidation Act 2010. This scheme, which is provided for in Articles 306 to 310 of the EU VAT Directive, with which Irish VAT law must comply, was introduced with effect from 1 January 2010. Detailed discussions with the travel industry were carried out prior to the introduction of the scheme which is a standard EU-wide Scheme in operation in most Member States of the EU. 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. Travel agents covered by the scheme are liable to VAT on their margin on the services provided rather than the full consideration they receive in respect of the supply of these services. For example, a travel agent acting as principal in arranging visits to the UK will pay UK VAT at 20% on hotel accommodation and event tickets and incur a zero UK VAT-rate on transport. The travel agent will then pay Irish VAT at 23% only on the margin, that is, the difference between his income from travellers and his expenses in buying in the services (accommodation, tickets, transport). None of the constituents that make up the income from the traveller is subject to VAT more than once.

The nature of the scheme means that the travel agent only has an obligation to account for VAT on the margin in the country where the agent is established. The travel agent has no further VAT obligations in places where the travel services are supplied. The travel agent cannot recover any VAT charged when he/she purchases the travel services but this is because VAT is only accounted for on the margin when the services are supplied on to the traveller. Travel agents, like other traders, can recover VAT on deductible overheads (electricity, heating, stationary) incurred by them in connection with their taxable supplies.

The margin scheme has benefits for a travel agent in terms of complying with their VAT obligations. In the absence of the scheme the travel agent may have compliance obligations across many Member Sates of the EU which would place significant administrative burdens on them.

Barr
Roinn