As a non-profit organization, it is customary practice to invoice the expenses incurred on behalf of participants (such as transportation and accommodation) when organizing events across the EU.
In this context, special attention should be drawn to the "Tour Operator Margin Scheme" (TOMS) regime, as it can have significant implications.
The “Tour Operator Margin Scheme” is a special VAT scheme that applies to businesses active in the organization of travel packages. However, contrary to widespread belief, the TOMS regime applies not only to ordinary travel agencies but can also to organisations supplying travel services eventually in relation to events such as symposiums, conventions, or congresses.
This means that travel services offered at your events, such as transportation of passengers and hotels, may be subject to TOMS when provided by third parties and when your non-profit organization acts in its own name vis-à-vis the participants.
To highlight the potential consequences, reference is made to the case of a German company which organizes an event in the Czech Republic. As part of the package, transport and accommodation services are also included for the participants.
In principle, the German company would charge Czech VAT to the participants for the registration to the event and accordingly, deduct the VAT levied on costs incurred for the purpose of the event.
However, under the TOMS regime, the VAT implications would be different. The German company would not charge Czech VAT but would instead charge German VAT (calculated according to German travel agency rules) on the travel services. In addition, the German company would not be allowed to deduct input VAT charged on travel costs (transport and hotel accommodation). So was ruled the case in judgment 10 Afs 179/2020 of the Czech Supreme Administrative Court.
The scope of TOMS is unfortunately not consistently interpreted throughout EU Countries. It is therefore of utmost importance to know how to deal with the travel costs of participants attending your event to avoid adverse consequences. Please contact us should you consider offering travel services to participants of your events and/or need more details about the above-noted issue.
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