EU Commission VAT Proposal Will Hit Travel Agents

by Jason Gorringe, Tax-News.com, London

03 October 2003

UK based travel agents are warning that the industry could lose as much as £5 billion in business and 5,000 jobs if a proposal by the EU Commission to impose VAT on the travel element of package holidays gets the go-ahead.

Speaking at a London press conference this week, executive director of the European Tour Operators Association, Tom Jenkins presented reporters with a over-sized air ticket which served to illustrate the impact that such a move would have on the industry.

"This (ticket) represents what will be put on the table at the meeting next Tuesday," Jenkins announced. "It is a ticket to send 5,000 jobs and £5bn in tourism revenues offshore. I call on the Chancellor to rip up the ticket by persuading his finance minister colleagues to adopt the industry's recommendations. If he is not able to succeed, he must use the UK's veto."

The meeting Jenkins was referring to is a gathering of EU Finance Ministers (ECOFIN) planned for October 7. At this meeting, the Commission intends to present plans to amend the directive which establish a "special scheme for travel agents" by "extending the scope" of the scheme.

Whilst transport in Britain is currently zero rated as far as VAT is concerned, any change in European rules would override UK legislation.

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