Value Added Tax Consolidation Act 2010 section 88

Margin scheme - travel agents

Section 88 sets out the travel agent's margin scheme (TAMS), which is the mandatory EU system for applying VAT to bought-in travel services supplied by a travel agent, acting as principal, to a traveller.

• The TAMS applies to bought-in services (such as accommodation, transport and tour guide services) supplied by a travel agent acting as principal to a traveller; the travel agent's margin is the total consideration received less the cost of bought-in services, and tax is charged on that margin less the VAT included in it.
• All margin scheme services supplied in respect of a journey are treated as a single supply; the place of supply is where the travel agent has established its business or, if the services are provided from a fixed establishment elsewhere, where that fixed establishment is located.
• A travel agent may not deduct or reclaim VAT on bought-in services supplied as margin scheme services; where a supply includes both margin scheme services and other goods or services, the consideration must be apportioned and only the margin scheme portion is taxed under the TAMS.
• Where bought-in services are performed outside the EU, the margin scheme services are treated as intermediary services and zero-rated; where a package includes services both inside and outside the EU, the margin must be apportioned on a cost basis between the two elements.