Collective Commentary about the New Package Travel Directive

THE TAX IMPLICATIONS OF COMBINED TRIPS 603 II. TAXATION OF PASSENGER AND LUGGAGE TRANSPORTATION Passenger transport in Europe is taxed on VAT, when it is provided by an entrepreneur or professional for tax purposes and onerousness. The transport of travellers and their luggage consists of a provision of services that can integrate the object of a combined trip. Generally the transport of travellers and their luggage is taxed at reduced rates for VAT purposes, either on regular lines or on occasional hiring of the service for excursions or other purposes. This is so allowed by the VAT Directive. The art. 98 of Directive 2006/112/EC allows States to approve one or two reduced tax rates for services or deliveries listed in Annex III. In this list some benefits are incorporated, with many connections with tourism, such as the transport of people and their luggage, access to shows, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions “ and others similar manifestations and places of a cultural nature ”, hotel or related accommodation, such as camping sites or caravan parking spaces. In Spain, in accordance with Law 37/1993, VAT (VATL), the transport services of travellers and their luggage, as noted, are taxed at the reduced rate of 10%, provided that it is land transport or between ports and airports located within the spatial scope of the tax, because if the origin or destination is outside such space, the benefit is exempt. That’s right, because art. 22 Thirteen VATL states the exemption of “passenger transport and their luggage by sea or air from or to a port or airport outside the spatial scope of the tax”. Thus, traveling, for example, between the Peninsula and the Balearic Islands to the Canary Islands, Ceuta and Melilla, is exempt from VAT, since the latter are non-VAT territories. The most common question is whether the transport of pets, together with their owners as passengers, can be understood as luggage, in order to include them within the reduced rate. In our opinion, it is correct, then it should not be understood as a different service by which a more expensive type is applied, the general of 21%. If the transport of pets is allowed, then for tax purposes, must be dealt as hand luggage.