EU VAT Reform for Travel Sector: ETAF’s Key Insights

On October 15, 2025, the European Tax Adviser Federation, commonly referred to as ETAF, submitted its response to the European Commission’s consultation on the planned VAT reform for the travel and tourism sector, welcoming efforts to modernize outdated rules. 

Previously, the European Commission opened a public consultation for all citizens and organisations, EU and non-EU, with a particular focus on stakeholders in the travel and tourism sectors, including SMEs, cross-border operators, Tax and Customs Authorities, and practitioners.

Key Comments on VAT Package for Travel and Tourism

In its document, the ETAF underlined that the main flaw of the current Tour Operators’ Margin Scheme (TOMS) is that it is failing to achieve its original purpose, generates legal uncertainty, and distorts competition due to inconsistent application across EU countries. Moreover, due to its inefficiencies, the current TOMS is disadvantageous to EU-based operators compared to non-EU providers.

From that perspective, the ETAF highlighted that it supports limiting TOMS to B2C supplies while excluding B2B transactions such as MICE activities, to restore VAT neutrality. ETAF, the leading EU organization that closely monitors and analyzes all EU initiatives in tax and professional matters, pointed out that the varied VAT treatment of passenger transport across EU countries creates complexity, compliance challenges, and market distortions.

Consequently, the organization emphasized the growing need for greater harmonisation, more precise definitions, and alignment with EU environmental and competitiveness objectives, aiming to ensure fairness and simplify compliance for cross-border operators.

Conclusion

The European Commission's public consultations closed on October 16, 2025, and received 244 valid responses. As the results show, 60% of the feedback came from companies. Additionally, most of the respondents came from Germany, with 28.69%, and Austria, with 22.95%. 

Until the official results of the consultations are published, one thing is sure, ETAF's input will push the EU towards further VAT reform, emphasizing that it is not only a matter of administrative efficiency but also of creating a level playing field for EU-based operators in an increasingly globalized market.

Source: ETAF - VAT rules applicable to the Travel and Tourism sector, European Commission, ETAF - Weekly Tax News