Services of event’s organization Vs Tour Operators Margin Scheme as regard VAT. Binding tax ruling of January 27th, 2016
It is common that among the services offered by travel agencies are those related to the organization and execution of meetings, conferences, seminars, congresses and, in general, similar events. When these services are provided on its own behalf by the travel agency arises the question whether is applicable the VAT treatment corresponding to the Tour Operators Margin Scheme (TOMS) or should apply the general rules of the VAT.
This issue has been considered repeatedly by the Spanish General Tax Directorate (DGT) and despite attempts by the DGT to clarify it, the conclusion that can be reached is that each situation or particular scenario requires an in-depth analysis to determine the correct treatment.
Firstly, TOMS is regulated in articles 141 to 147 of the Spanish VAT Act, which applies:
“1. to transactions carried out by travel agents when they act on their own behalf with respect to travellers and used in the performance of the travel goods delivered or services provided by other entrepreneurs or professionals.
For purposes of this special regime, will be considered travel lodging or transportation services provided jointly or separately and, where appropriate, with other accessory or complementary nature thereof.
2. to the operations carried out by the organizers of tours and any entrepreneur or professional where the circumstances provided for in the previous point.”
The particularity of these supplies of services is that they are treated as a single supply, with mainly accommodation and/or transportation services, although different goods are delivered together or several complementary services supplied.
However, for the provision of a single service related to the global organization of an event, provided in its own name, it is possible that accommodation and transport services are also included, and here is where arise the question if these services must follow TOMS.
In such a case, DGT understands that this would not be the case insofar as it is a single supply of event organization, thus the fact of including an “accessory” service of accommodation or transport must not distort the nature of the main service of organization and it would therefore be artificial to separate these supplies, linked to the organization of the event, and to treat them under TOMS, instead of being included within the single provision of organization.
In this way, the key point will be to determine, first, if it is a main service of organization of events or a main service of accommodation and transport and, secondly, if it is rendered as a single service or must be treated as several separate services. If it is a single organization service (to which cannot or should not separate the rest of provisions), although it includes accommodation and transportation as a complement thereof, will follow the VAT treatment corresponding to the general rules, whereas if it is a single service composed mainly of accommodation and transportation, even if it includes an event as a complementary service, it must follow TOMS VAT treatment.
Finally we must remember that the services subject to TOMS are deemed to be placed where the travel agency has its headquarter or a permanent establishment where from the service is provided. On the other hand, organization services provided to an entrepreneur or professional are deemed to be placed where the latter have its headquarters or a permanent establishment as effective addressee of the service, whereas if they are provided to a consumer shall be located where the service is materially provided.
Attached is a copy, in Spanish, of the binding tax ruling number V0338-16, dated January 27, 2016.