Section 25 of the German VAT Act provides special regulations for travel services. According to Section 25 paragraph 1, sentence 4, of the German VAT Act in conjunction with Section 3a paragraph 1 of the German VAT Act, such transactions are deemed to be carried out in the place where the company (tour operator) operates its business. Companies that provide travel services pursuant to Section 25 of the German VAT Act must apply a margin taxation and cannot claim input tax deduction from the travel input services used. This VAT simplification is known as the Tour Operators Margin Scheme (TOMS).
Source: wts.com
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