Provision of a single service Vs travel agency service by an entity based in the Canary Islands. Binding consultation 1826
Through the binding consultation dated May 11, 2017, the General Tax Directorate of the Canary Islands is requested for the IGIC treatment in different scenarios and services provided by a travel agency based in the Canary Islands, from which the services are provided.
In this sense, the entity carries out the activity of travel agencies, organizing on its own name trips or promoting those organized by other agencies, which recipients may be taxable persons or individuals, established in the Canary Islands, the EU or in another non-EU country. Normally, it is a matter of distinguishing those cases in which a single service of event organization is offered in front of the services of travel agencies, falling the latter within the special Tour Operators Margin Scheme.
In the first case proposed there is a scenario where American students hire, through an agency in the United States, a cultural and educational trip to Spain, with the idea of learning the language. The trip consists of: plane ticket, language course, hotel, transfers, diets and cultural visits with tickets to museums and monuments with official guides. In any case, the Canary Islands travel agency acts in its own name in the acquisition of goods and services.
In these cases where there is a complex service consisting of several different services or services related to each other, the main question lies in establishing which services have a main character and which are accessories. That is to say, it is necessary to establish if the services that make up the complex operation and that are different from the service of lodging and transport have a main character or accessory in front of the services of transport and lodging. Or it may happen that both operations (travel and event organization) have a main character, so each one will follow its own treatment. In this sense, a fixed rule does not exist and each case may have a different treatment.
In the proposed scenario the DGT considers that the services of lodging and transport are accessories to the activity of educational organization, which is the principal motivation of the traveller, so that it shall be treated as a single main operation of organization service. This service, rendered to a taxable person (American travel agency) will be deemed to be placed in the place of establishment of the recipient, that is, the United States, reason why it will not be subject to the IGIC.
On the contrary, in the event that the aforementioned service was contracted directly by individuals, the service would be deemed to be located in the service provider’s place of establishment (general rule when the customer is not an entrepreneur or a professional), so that it would be subject to IGIC, independently from where the trip and the events will be developed.
Another possible scenario is where an European individual directly contracts with the Canarian agency a cultural, educational and sports trip, with visits to different Spanish cities, tickets to museums and even a sports campus for activities, including plane tickets, hotels and transfers. In this case, according to the criterion of the DGT, the travel service stands over the rest of activities, so it will be understood that a single service of travel agency is provided, subject to the IGIC as the Canary Islands is the territory of establishment of the agency.
Finally the same case is considered when the traveller is a North American individual and the trip goes through Europe. In this case, the service is still a travel agency one, subject to the IGIC as the territory of establishment of the agency is the Canary Islands, but taking into account that there is a trip USA – Europe – USA, the part of the trip that takes place outside the territory of the EU will be exempt from the IGIC, in accordance with the provisions of article 71 of Law 4/2012. That is to say, in this case it would be a single service of travel agency (TOMS) partially exempt from IGIC.
A copy (in Spanish) of the binding tax consultation number 1826, dated May 11, 2017, is attached.