Dominic Hannigan (Meath East, Labour)
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Question 73: To ask the Minister for Finance if any consideration has been given to changing the rules for travel agents and the charging of VAT for the holidays they sell; the rules for VAT on holidays sold by travel agents in the UK; and if he will make a statement on the matter. [41020/11]

Michael Noonan (Limerick City, Fine Gael)
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I am advised by the Revenue Commissioners that the Finance (No.2) Act 2008 amended the Value-Added Tax Act 1972 to provide for the introduction a Travel Agents Margin Scheme. Under this scheme certain travel agents are liable to VAT on their supply of certain services, not in respect of the consideration they receive for such services but in respect of the travel agents margin on those services. This scheme, which is provided for in Articles 306 to 310 of the EU VAT Directive, was introduced with effect from 1 January 2010. The scheme deals with the activities carried on by travel agents who act in the capacity of a principal when supplying certain travel services such as transport, accommodation, etc, which they have bought in from third parties for onward supply to travelers. The Scheme is a standard EU wide Scheme and is in operation in the almost all Member States of the EU including the UK. In the UK it is referred to as the TOMS (Tour Operators Margin Scheme) but in Ireland it is referred to as the TAMS (Travel Agents Margin Scheme.) For the purposes of the VAT Directive both travel agents and tour operators covered by the Scheme are treated the same for VAT purposes. Consequently there is no material difference between the TAMS in operation here and the TOMS in operation the UK.

The rate of VAT that applies to the supply of travel facilities by a travel agent covered by the Travel Agents Margin Scheme is the standard rate of VAT, which is currently 23 per cent.

Detailed discussions took place with representatives of the travel industry prior to the introduction of the scheme.