Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

February 5, 2021

Germany removes Tour Operators’ Margin Scheme simplification for non-EU businesses

On 1 February 2021, The German Ministry of Finance issued a decree dated 29 January 2021 stating that non-European Union (non-EU) businesses that provide travel services do not have the right to use the value-added tax (VAT) simplification known as the Tour Operators’ Margin Scheme (TOMS).

As a result, non-EU businesses have an obligation to register for VAT in Germany with effect from 1 January 2021 to the extent that their travel services are “used and enjoyed” in Germany.

According to the decree, the German TOMS simplification rules are not applicable to entities resident in non-EU Member States and without a fixed establishment in any EU Member State. This means that services provided by non-EU providers of certain “travel services” are subject to German VAT based on the general place of supply rules. For example, the following services supplied by non-EU residents are subject to German VAT, with a right to deduct corresponding input VAT:

  • Transportation services in Germany
  • Events held in Germany
  • Accommodation services
  • Catering services

However, the decree states that the TOMS simplification may be applied for services rendered by non-EU resident entities up to 31 December 2020.

It remains to be seen if the decree is in line with the German VAT law itself. If the respective German VAT regulation would not limit the TOMS regime to EU businesses, non-EU business would be able to invoke the German VAT regulation even if it would not be in line with the VAT directive.

The implications of this decree could be material for some businesses, including entities in a wide range of sectors that arrange travel for other group companies. Also, other EU Member States may potentially change their domestic VAT law related to TOMS or their interpretation of EU law to mirror this position. Given the retroactive nature of this new decree, and its wide-reaching implications, affected businesses should urgently consider its impact.


For additional information with respect to this Alert, please contact the following:

Ernst & Young GmbH, Cologne
Ernst & Young GmbH, Berlin
Ernst & Young LLP (United Kingdom), London



The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more