TOMS and EU Digital Platform VAT Rules for Travel Operators

TOMS and the EU’s Digital Platform Rules for Travel Operators in 2026

The Tour Operators’ Margin Scheme (TOMS) remains one of the most distinctive elements of European VAT law. It allows travel businesses that buy and resell packaged travel, typically a combination of accommodation, transport, and related services, to pay VAT only on their profit margin, rather than on total turnover. This simplification, set out in Articles 306 to 310 of the EU VAT Directive (2006/112/EC), was designed to prevent complex multi-country VAT reporting and double taxation.

But as digitalisation reshapes the European travel market, new legislation is changing how VAT applies to intermediaries. The VAT in the Digital Age (ViDA) package, adopted on 11 March 2025, introduces “deemed supplier” rules for online platforms facilitating short-term accommodation and passenger transport. For travel platforms such as Airbnb, Booking.com, or Uber, this means they can now be held directly liable for VAT when the underlying supplier, for instance, a property host or driver, fails to charge it.

How TOMS and ViDA Interact

The European Commission recognised early that these two frameworks could overlap, risking double taxation. To prevent this, ViDA specifically excludes TOMS-compliant supplies from its deemed supplier regime. In practical terms, this means that if a platform facilitates a package already covered under TOMS, for example, a tour operator reselling a bundled European itinerary through an OTA, the platform is not responsible for VAT on that transaction. Instead, the TOMS operator continues to apply margin-based taxation in their country of establishment.

The reverse also applies. Supplies covered by the ViDA deemed supplier model cannot claim TOMS relief. When a platform such as Uber acts as a deemed supplier for a transport service, it must apply full VAT on the total fare at the place of consumption. This mutual exclusion prevents overlap and ensures that each system operates within its intended scope.

Agency, Principal Status, and Verification Duties

Under TOMS, an operator must act as a principal or an undisclosed agent. Platforms under ViDA are automatically treated as principals for their facilitated supplies. However, where a transaction clearly falls under TOMS, for example, when a tour operator acts as a disclosed agent selling a complete package, the platform must verify the TOMS status to avoid misclassification. This is normally done through supplier declarations or validation of VAT identification numbers. Failure to distinguish between TOMS and non-TOMS transactions could result in platforms being incorrectly charged as deemed suppliers.

Place of Supply and Margin Determination

TOMS continues to apply the origin principle, meaning VAT on the margin is charged in the Member State where the operator is established. ViDA, by contrast, applies the destination principle, taxing consumption where it occurs. When both regimes intersect, the TOMS exclusion takes precedence, allowing margin taxation at origin.

For platforms facilitating mixed sales, for instance, a package that includes both TOMS and non-TOMS services, the transactions must be apportioned. The margin component remains under TOMS, while standalone services such as direct accommodation bookings or app-based extras are treated under ViDA’s deemed supplier rules and taxed at destination.

Digital Reporting and E-Invoicing

From 1 July 2030, ViDA’s Digital Reporting Requirements (DRR) will introduce real-time e-invoicing for cross-border B2B supplies. TOMS operators, however, will continue to file quarterly VAT returns with annual adjustments. Platforms subject to ViDA will need to segregate TOMS-related data in their digital reporting systems to avoid duplication. Full ViDA integration, including harmonised e-invoicing, is expected by 1 January 2035, at which point TOMS operators may need API connectivity to share data with compliant platforms.

Timeline and Compliance Outlook

Between 2028 and 2030, platforms can opt in voluntarily to test TOMS exclusions before mandatory enforcement. From 1 January 2030, all digital platforms facilitating accommodation or transport must apply the deemed supplier rules, excluding TOMS transactions, or face penalties of up to 15% of turnover in some Member States. TOMS audits during this period are expected to examine how operators and platforms exchange data and record margin calculations.

From 2030 onward, DRR obligations will apply to intra-EU B2B sales, with TOMS operators continuing quarterly filings. Full ViDA integration by 2035 will complete the transition to a unified digital VAT reporting system across the EU.

Challenges for Operators and Platforms

Interpretation challenges remain. As noted in the European Commission’s Fiscalis Workshop (September 2025), terms such as “facilitation” and “listing” still lack uniform definitions. Platforms will need to invest in IT systems capable of flagging TOMS-related sales and ensuring correct VAT treatment. Member States may also introduce requirements for validating suppliers’ VAT IDs, which could inadvertently exclude smaller TOMS participants.

Opportunities

Despite these challenges, the TOMS exclusion within ViDA creates strategic opportunities. Platforms that onboard only TOMS-registered operators could streamline compliance and limit VAT exposure. For operators, aligning with TOMS ensures continued simplification and avoids being pulled into ViDA’s more stringent platform liability rules.

Travel operators should conduct internal TOMS audits focusing on platform dependencies, ensuring all bundled travel services are correctly classified and supported by supplier documentation. Software tools such as VATCalc can automate margin segregation and DRR readiness. The European Commission is expected to release explanatory notes in early 2026, which will provide further clarity and examples.

The UK Position: TOMS and Digital Platforms Post-Brexit

The United Kingdom continues to operate its own version of TOMS under Schedule 9A of the VAT Act 1994 and HMRC Notice 709/5, last updated in April 2024. It covers worldwide travel services sold by UK operators, applying VAT only on the margin and zero-rating services enjoyed outside the UK.

Unlike the EU, the UK does not have a ViDA framework. Its “deemed supplier” rules for digital platforms stem from e-commerce reforms introduced on 1 January 2021, focusing on Online Marketplaces (OMPs) handling imported goods valued at £135 or less, and certain digital services. These do not extend to TOMS travel packages.

How UK TOMS Interacts with Platform Rules

There is no direct overlap between UK TOMS and the deemed supplier regime. Under UK rules, OMPs must charge VAT on the full value of facilitated B2C imports or digital services if the underlying seller does not. TOMS packages, however, are treated as single margin supplies, not as goods imports. Therefore, when a platform facilitates a TOMS package, for instance, a UK OTA reselling packaged holidays, the output VAT remains on the operator’s margin only.

The treatment of agency versus principal status mirrors the EU approach. Disclosed B2B agents are outside TOMS and apply the reverse charge, while undisclosed agents selling packages remain within TOMS. Because the UK is no longer part of the EU VAT area, UK platforms cannot use the EU One Stop Shop (OSS) and must register separately in each Member State for non-TOMS EU sales.

Exports, Reporting, and Recordkeeping

TOMS zero-rates travel outside the UK, meaning UK operators selling EU packages continue to benefit from no VAT on their margin. However, platforms that also sell digital add-ons such as app fees or advertising space must charge 20% VAT on those elements.

Platforms must keep six years of records for facilitated transactions, including TOMS-related ones, but TOMS operators still report their margin through standard VAT return boxes (1 and 6), with annual adjustments. There is no real-time reporting equivalent to ViDA, though HMRC’s Making Tax Digital (MTD) for VAT, extended in 2026, is expected to enhance data integration between platforms and accounting systems.

Practical Considerations for UK Operators

Brexit divergence adds administrative complexity. UK platforms can no longer rely on MOSS or OSS simplifications and may need separate EU VAT registrations for non-TOMS transactions. Audits increasingly focus on verifying margin evidence in platform-facilitated sales. Nevertheless, the UK’s global TOMS scope gives its operators a competitive advantage, since margins on non-UK travel remain zero-rated.

UK travel businesses should review contracts to confirm whether platforms act as agents or principals, use HMRC’s TOMS calculator for margin estimates, and prepare for expanded MTD reporting from 2026.

Final Antravia Thoughts

TOMS remains a vital simplification tool for the European and UK travel industries, even as ViDA and digital platform rules reshape how VAT is applied. The core message is clear: TOMS supplies are excluded from the deemed supplier regime, ensuring that packaged travel retains margin taxation, while digital platforms bear full VAT responsibility only for standalone or non-TOMS services.

For travel businesses operating across borders, understanding these boundaries is crucial to prevent double taxation and maintain compliance under both EU and UK frameworks.

Antravia Advisory continues to help operators, OTAs, and travel platforms navigate these transitions, from TOMS audits to ViDA readiness assessments and digital VAT reporting setup.
For tailored guidance, visit vat.travel.

References

• European Commission, Directive 2006/112/EC on the Common System of Value Added Tax (as amended 2025)

• European Commission, VAT in the Digital Age (ViDA) Package, COM(2022) 701, adopted March 11, 2025

• Fiscalis Workshop Summary Report, September 2025

• HMRC Notice 709/5 (Travel Agents and Tour Operators), updated April 2024

• HMRC Making Tax Digital for VAT, 2025–2026 implementation timeline

• VATCalc (2025). Software for EU VAT Compliance and TOMS Margin Calculations

Disclaimer:
Content published by Antravia is provided for informational purposes only and reflects research, industry analysis, and our professional perspective. It does not constitute legal, tax, or accounting advice. Regulations vary by jurisdiction, and individual circumstances differ. Readers should seek advice from a qualified professional before making decisions that could affect their business.
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