Commentary

V3.594 Tour operators margin scheme—other matters

Part V3 Supplies, acquisitions and imports

V3.594 Tour operators margin scheme—other matters

V3.594 Tour operators margin scheme—other matters

Place of supply

The place of supply of a designated travel service is in the member state in which the person's business is established or, if the supply is made from another fixed establishment, the member state in which the fixed establishment is situated1.

Thus, a person solely established in the UK is liable to account for tax only in the UK. A person who has establishments in more than one country has to identify the establishment from which the supply is made. If supplies are made in another member state, he may be required to be registered there.

A person who is established in one member state will be regarded as making supplies in another via a fixed establishment in that other member state, even if that establishment is no more than an auxiliary organ2, provided it is of sufficient size in terms of human and technical resources3.

If the place of supply is made outside the EU, they are outside the scope of VAT4.

The place of supply of in-house supplies is determined by normal VAT rules5.

Liability of supplies

Note that the enjoyment provisions relating to margin scheme supplies, unlike the use and enjoyment provisions which apply to certain services (see, for example, V3.193) affect the liability, but not the place, of supply. Designated travel services that are enjoyed outside the EU are zero-rated. Where services are partly enjoyed within and partly outside the EU, they are standard-rated within the EU, and zero-rated outside6. HMRC

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