V3.592 Definitions and scope

Designated travel services

A designated travel service is a supply of goods or services1

  1.  

    (1)     acquired for the purposes of his business; and

  2.  

    (2)     supplied for the benefit of a traveller without material alteration or further processing;

by a tour operator in a member state in which he has established his business or has a fixed establishment.

A supply which is subject to the tour operators' margin scheme is therefore defined as a designated travel service2. HMRC also use the term “margin scheme supplies”3. Certain supplies always fall within the definition of designated travel service4

  1.  

    (1)     accommodation;

  2.  

    (2)     passenger transport;

  3.  

    (3)     hire of means of transport;

  4.  

    (4)     use of special lounges at airports;

  5.  

    (5)     trips or excursions; and

  6.  

    (6)     services of tour guides.

The supply of one or more designated travel services as part of a single transaction is treated as a single supply of services5. As a result, the CJEU has held6 that, whilst holiday accommodation may, if member states so choose, be taxed at a reduced rate under Directive 2006/112/EC art 98 and Annex III, that does not apply where the accommodation forms part of a margin scheme package since “travel services” do not fall within the list of supplies contained in that Annex.

There has to be a clear link between the service supplied to the tour operator and that supplied to the traveller for the service to be deemed to be a designated travel service, but the services do not have to be supplied exclusively for

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