German tour operators proposed for hidden tax irks

(MENAFN-Bangladesh Monitor)

Germany and tour operators appear to be on a collision course if the country implements a new tax next year, which industry executives say could wreak “unprecedented havoc” on overseas markets.
The European Tour Operators Association (ETOA) reports that the German authorities have confirmed that its twice-delayed decision to apply value added tax (VAT) to all overseas sales of holidays in Germany by non-European companies will enter into force on 1 January. , two years after its originally scheduled launch in 2021.
According to Tom Jenkins, CEO of ETOA, tax rates will vary and depend on how vacation packages are purchased, but could be as high as 9% or 2%. Jenkins said the tax should be levied on almost every aspect of the sale of holidays and travel services in Germany and that, especially for small travel businesses and travel advisers, it could be a financial and administrative.
“The tax will be levied on travel advisor commissions, marketing and sales, bonding and insurance overhead, website, purchases and corporate office costs; it’s all paid for on the margin,” Jenkins said. “It is a sales tax explicitly aimed at services provided in another country.”
The tax ruling would also require companies based outside the EU to register with Germany to buy and sell German tourism products and file a tax return.
Jenkins said taxes levied on non-EU travel companies could end up being passed on to the consumer in the form of higher prices, making trips to Germany much more expensive for non-EU travelers buying packages and services. vacation.
“This is not just a tax on the export of services – it targets the process by which Germany has been sold as a destination for generations,” Jenkins said in a statement provided to Travel Weekly, calling the Extension VAT of a tax on a margin already added in the United States
Currently, non-EU businesses selling travel in Germany are exempt from paying VAT under TOMS or the Tour Operator Margin Scheme. Rather than registering and accounting for VAT in the destination where the services were provided, under TOMS non-EU companies paid margin tax where the sale was made and the business established.
The new rule would require companies to pay taxes twice: once in the country where they are based when they made a sale of holiday products in Germany and again on the trip possibly made in Germany.
“The situation is as ridiculous as it is unacceptable,” said Terry Dale, CEO of the US Tour Operators Association. “My members pay tens of millions of dollars in German taxes on services they buy in Germany. Why should they pay taxes on their US business? And why are they making the process of selling Germany to the both expensive and toxic?
How will the tax be collected?
Adding to the uncertainty surrounding the rule, Germany has yet to find a way to monitor and enforce the rule or compel the tens of thousands of non-EU entities and travel agencies selling vacations. in Germany to comply and pay the taxes. So far, it has not been made clear what this process will look like to travel agencies doing business in Germany.
“Do the Germans have the greatest bureaucratic capacity to deal with what they do?” Jenkins asked. “There are 31,000 travel agents in China, 10,000 in Japan, 80,000 in the United States”
Expedition: visit and restoration before the Disney river cruise
With only five months to come up with a compliance program as well as a system to apply penalties for non-compliance, as well as issue some sort of official public notice to the many foreign tour operators to which the taxes apply, executives of travel industry say it looks like Germany is undertaking a task that could cause more problems than the revenue it hopes to collect is worth.
They also said the tax could make Germany more expensive for non-European businesses and could encourage some to locate elsewhere in Europe. However, Jenkins fears that if the tax is implemented, it could set a precedent and that other EU countries “will line up to do the same”.
“This is a savage attack on an export industry, and they have made no attempt to explain, justify or even call attention to their intentions,” Jenkins said. “What is shocking is the silence coming out of Germany on this. Those of us who sell Germany, who export their services, deserve better than this.


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