On March 1, 2021, the ECJ issued its Order in the case C-220/11 (Star Coaches).
Context: Article 104(3), first subparagraph, of the Rules of Procedure — VAT Directive — Special tax scheme for travel agents — Supply to travel agents of a coach transport service but no other services
Article in the EU VAT Directive
Article 306
1. Member States shall apply a special VAT scheme, in accordance with this Chapter, to transactions carried out by travel agents who deal with customers in their own name and use supplies of goods or services provided by other taxable persons, in the provision of travel facilities.
This special scheme shall not apply to travel agents where they act solely as intermediaries and to whom point (c) of the first paragraph of Article 79 applies for the purposes of calculating the taxable amount.
2. For the purposes of this Chapter, tour operators shall be regarded as travel agents.
Article 307
Transactions made, in accordance with the conditions laid down in Article 306, by the travel agent in respect of a journey shall be regarded as a single service supplied by the travel agent to the traveller.
The single service shall be taxable in the Member State in which the travel agent has established his business or has a fixed establishment from which the travel agent has carried out the supply of services.
Article 308
The taxable amount and the price exclusive of VAT, within the meaning of point (8) of Article 226, in respect of the single service provided by the travel agent shall be the travel agent’s margin, that is to say, the difference between the total amount, exclusive of VAT, to be paid by the traveller and the actual cost to the travel agent of supplies of goods or services provided by other taxable persons, where those transactions are for the direct benefit of the traveller.
Article 309
If transactions entrusted by the travel agent to other taxable persons are performed by such persons outside the Community, the supply of services carried out by the travel agent shall be treated as an intermediary activity exempted pursuant to Article 153.
If the transactions are performed both inside and outside the Community, only that part of the travel agent’s service relating to transactions outside the Community may be exempted.
Article 310
VAT charged to the travel agent by other taxable persons in respect of transactions which are referred to in Article 307 and which are for the direct benefit of the traveller shall not be deductible or refundable in any Member State
Facts
- Star Coaches is engaged in the transport of persons by coach in the Czech Republic and between the Member States. It operates that transport either with its own coaches or by using subcontractors, which are transport companies whose transactions are subject to VAT. Its customers are exclusively travel agents established in the Czech Republic or in other Member States. Star Coaches always deals with its customers in its own name. When it has recourse to a subcontractor, it draws up for its customers an invoice mentioning VAT and seeks a refund of the excess tax on the basis of the general scheme of VAT.
- Star Coaches repeatedly deducted large amounts of excess VAT. In this respect the Finanční úřad pro Prahu 5 (Tax Office for Prague 5) considered that the company was supplying travel services and should have applied not the general scheme of VAT but the special scheme for travel agents laid down in Paragraph 89 of the Law on VAT. On 25 June 2008 it issued a VAT recovery notice for January 2008.
- Star Coaches lodged a complaint against the recovery notice. When the complaint was rejected by decision of the Finanční ředitelství pro hlavní město Prahu of 16 December 2008, it brought an action before the Městský soud v Praze (City Court, Prague), which dismissed it by judgment of 18 June 2010. Star Coaches thereupon appealed on a point of law to the Nejvyšší správní soud (Supreme Administrative Court).
- That court entertains doubts as to the application of the special scheme for travel agents laid down in Article 306 of the VAT Directive.
- It notes, first, a difference between the Czech version of that provision and Paragraph 89 of the Law on VAT which transposed the provision into national law. While Article 306 refers to services supplied to travellers, Paragraph 89 covers those supplied to customers of travel agents, an expression which comprehends not only travellers but also other persons. The court points out, however, that there are also differences between the language versions of Article 306 of the VAT Directive and those of Article 26 of Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the Member States relating to turnover taxes — Common system of value added tax: uniform basis of assessment (OJ 1977 L 145, p. 1, ‘the Sixth Directive’), which applied before the entry into force of the VAT Directive, with some versions using the term ‘customer’ and others the term ‘traveller’. It states that actions for failure to fulfil obligations have moreover been brought against several Member States, including the Czech Republic, by the European Commission for using the term ‘customer’ and thus referring, in the Commission’s view, to too broad a class of persons.
- It raises the question, second, should the Court hold that Article 306 of the VAT Directive extends to customers of a travel agent, whether an undertaking such as Star Coaches must be classified as a travel agent within the meaning of that provision. It indicates that, in its view, that is not the case where the undertaking provides only a transport service and no other tourist services. It follows that the present case must be distinguished from Case C‑163/91 Van Ginkel [1992] ECR I‑5723, in which the undertaking concerned, in addition to accommodation, also supplied information, advice and reservation services.
Questions
AG Opinion
None
Decision (Order)
A transport company which merely carries out the transport of persons by providing coach transport to travel agents and does not provide any other services such as accommodation, tour guiding or advice does not effect transactions falling within the special scheme for travel agents in Article 306 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.
Source
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