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Margin taxation for travel services also in the case of a simple resale of accommodation services

Tax News - 21 Aug 2023 | 2 minutes read

In its ruling of June 29, 2023, the ECJ affirmed the applicability of VAT margin taxation for travel services in the event that accommodation services are purchased from a third party and resold in the company’s own name without the service being linked to additional services. This also affects taxation within the group.



A VAT-registered (Polish) company (C), as a “consolidator of hotel services”, offers its customers the possibility to book accommodation services in hotels and other similar establishments. C purchases the accommodation services from third parties and then resells them to its customers in its own name. Although C also offers consulting services for the selection of accommodation and support for the organization of the trip, C predominantly only provides accommodation services.

The question was whether the special margin scheme for travel services, as defined in Art. 306 of the VAT Directive, applies to the provision of accommodation services that are not combined with additional other services, “to the extent that travel agents act in their own name vis-à-vis the traveler and use supplies of goods and services from other taxable persons to carry out the travel.”


Judgment of the ECJ

The ECJ clarified in its judgment of 29.06.2023, C-108/22, Dyrektor Krajowej Informacji Skarbowej, that the special scheme for travel services (margin taxation) is applicable even if the taxable person’s supply exclusively comprises accommodation, provided that this supply has been purchased from a third party and is resold on its own behalf.

Excluding the special scheme in the case of the provision of (only) accommodation services would lead to a complex tax regime which, moreover, would contradict the objectives of the VAT Directive.


Practical effects

As of January 1, 2022, the special regulation for travel services pursuant to Section 23 UStG (Austria) is also applicable or applicable to travel services provided to an entrepreneur (B2B).

Therefore, if a group company with its registered office in Austria purchases or obtains accommodation services from a third party and resells or provides them within the group to another group company, the accommodation service of the Austrian group company is subject to the special regulation for travel services. The travel service is carried out at the place from which the supplying company operates its business; if the other service is carried out by a permanent establishment, the permanent establishment is deemed to be the place of the other service. In this case, the output service of the Austrian group company is subject to margin taxation in Austria. The Austrian group company is therefore not entitled to an input tax deduction with regard to the purchased travel inputs (accommodation services from third parties).

If, on the other hand, travel services are merely procured (within the group), the above-mentioned special rule of Art 306 (1) VAT Directive does not apply, which means that margin taxation and the associated exclusion from input tax deduction (within the group) do not apply. This opens up a scope for design in der group.