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European Commission v Federal Republic of Germany

In European Commission v Federal Republic of Germany C-380/16 (8 February 2018) the CJEU found that German law on the Tour Operator Margin Scheme (‘TOMS’) was not compatible with the principal VAT directive.

The issue was the exclusion by Germany from TOMS of supplies by travel agents to businesses (‘B2B’) as opposed to individuals (‘B2C’). The commission considered that this exclusion contravened EU law and pointed to the CJEU’s case law in which ‘client’ in the principal VAT directive (arts 306 to 310) includes both individual consumers and businesses.

The CJEU observed that a wide approach to the concept of client was the most appropriate to meet the two objectives of the directive; the simplification of the VAT regime applicable to travel agents and the balanced allocation of the receipts from VAT between member states. The court added that the exclusion adopted by Germany did not reduce...

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