ETOA: New German VAT Tax Rule is a threat to Tourism Export

Providing tourism and travel services in Germany will get a lot more costly, if your company is located outside the European Union. ETOA learned about a new regulation on Friday, making it tough for UK companies to deal with Germany.

ETOA: New German VAT Tax Rule is a threat to Tourism Export

Tom Jenkins, CEO of the European Tourism Association expected this.

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How to tourists travel to Europe and the UK after Brexit? This question was debated by ETOA and Tom Jenkins on the sideline of the 2019 World Travel Market in London. 2021 now started, and the UK outside the EU is a reality.

On January 29, 2021, the German Federal Ministry of Finance sent new guidelines to tax authorities in all German states.

Signed by a lady or gentleman by the last name Rademacher and no first name, this document has an official number 2020/0981332. In addition, another number abbreviated with GZ III C2 – S 7419/19/10002 : 004 makes this document even more official and threatening.

The official document says:
I. A question was raised, if special rules for travel services also apply for companies headquartered in a third country, and without a branch in the common EU region.

II clarifies that the (special rule) exemption for VAT tax for such companies is not applicable.

III. The letter orders tax authorities to apply this ruling to all pending cases. This rule would not apply for services concluded by December 31, 2020

What this means?

It clarifies that, in the view of the German authorities, the Tour Operators Margin Scheme is only available to companies within the European Union. It follows that non-EU companies that deliver travel services within Germany must register for VAT with the German Tax Authorities. This is effective from 1st January 2021.

Since the UK is now no longer a member of the EU, it will have a dramatic impact in terms of tax liabilities and compliance costs for British companies, but it goes further.


This move may have been triggered by Brexit given the size of UK outbound business, but its remit is not exclusive to the UK. It encompasses all operators selling Germany anywhere in the world who will be required to register and pay VAT on the German portion of the product at the price charged to the consumer.

It also has wider implications as this could be adopted by other member states, and constitute a serious threat to EU export revenues.

ETOA is requesting an urgent clarification by German authorities.