Germany and tour operators appear to be on a collision course if the country implements a new tax next year, one that industry leaders say could wreak “unprecedented havoc” on foreign markets.
The European Tour Operators Association (ETOA) says that German authorities have confirmed that its twice-deferred decision to apply a value-added tax (VAT) to all foreign sales of Germany vacations by non-EU companies will go into effect on Jan. 1, two years after its originally scheduled 2021 start.
According to ETOA CEO Tom Jenkins, tax rates will vary and depend on how vacation packages are sourced but could be as high as 9% or as low as 2%. Jenkins said the tax is anticipated to be levied on nearly every aspect of selling vacations and travel services to Germany and that especially for small travel businesses and travel advisors, it could pose a financial and administrative burden.
“Tax will be levied on travel advisor commissions, marketing and sales, bonding and insurance overheads, website, purchasing and head office costs; all of these are paid for out of the margin,” Jenkins said. “It is a sales tax explicitly aimed at services delivered in another country.”
The tax ruling would also require companies based outside of the EU to register with Germany to buy and sell German tourism products and to file a tax return.
Jenkins said the taxes levied against non-EU travel businesses could end up being passed on to the consumer in the form of higher prices, making travel to Germany much more expensive for non-EU travelers who buy vacation packages and services.
“This is not just a taxation on the export of services — it targets the process by which Germany has been sold as a destination for generations,” Jenkins said in a statement provided to Travel Weekly, calling