MIT responds to EU consultation on the VAT Travel Agents Scheme

The Malta Institute of Taxation has participated in the consultation launched by the EU Commission on the VAT Travel Agents Scheme and the VAT rules of passenger transport (See MIT News 26 July 2025).

The Indirect Tax Committee of the MIT submitted, on behalf of the Institute, replies to the Commission’s questionnaire, recognising the continued relevance of the Travel Agents Scheme as a simplification measure in the context of B2C travel services, but that its current broad application, and interpretation of the legislation in practice does not take into account the significant changes to travel services and business models since the rules were introduced. The impact of the scheme on VAT neutrality is also a concern. Its mandated application in certain circumstances, e.g. B2B supplies, MICE etc. was identified as an issue with the current framework which can be addressed by an opt-out. From a practical perspective, the lack of clarity around the manner in which the margin is to be calculated and the treatment of loss-making packages are issues which should be addressed.

Overall, the current Travel Agents Scheme, which was intended to be a simplification measure for VAT reporting by travel operators is no longer considered fit for purpose and should be revised to reflect developments in the travel sector and in a way to enable simplification to be retained, yet optional for businesses in particular where the use of the scheme leads to additional burdens and a negative impact on VAT neutrality.

With regard to the rules on passenger transport, the MIT is of the view that there should be no change to the rules, however clarity as to the interpretation of the exemption in article 148 would be welcome.