EU VAT Emerging Issues in the Tourism Sector

The VAT framework governing tourism in the European Union is undergoing its most significant reform since the introduction of the Tour Operators Margin Scheme (TOMS) in 1977. The VAT in the Digital Age (ViDA) package, adopted on 11 March 2025, introduces digital reporting obligations and a deemed supplier model for platforms facilitating short-term accommodation and passenger transport. In parallel, the European Commission launched a public consultation in July 2025 on modernizing VAT rules for travel and tourism, with a legislative proposal expected by the end of 2026. Recent Court of Justice of the European Union (CJEU) case law, including the Dragoram Tour Order of June 2024 and earlier judgments on intermediated hotel services, has further clarified the scope of TOMS.