In the first case, each service provider will have to determine for himself whether there is a possibility of reclaiming VAT with respect to the VAT that has been paid on the advance payments. We also refer to the other FAQ’s such as the FAQ relating to the hotel manager (see above). Please note that in principle a VAT exemption applies to the sale of airline tickets and that therefore no VAT refund issues arise in the event of cancellation.
In the second case, the situation is more complex because the special VAT scheme for travel agents has to be taken into consideration.
If a travel agent has already received an advance payment for a combined trip, it is accepted that no VAT is due on this advance payment. If the trip is then cancelled before the customer paid its surplus, no VAT has been due and thus no VAT will then have to be reclaimed.
If the travel agent has already paid VAT on the advance payments that he received for the combined travel, it is advised to take a closer look on whether you can reclaim this VAT (with, in principle, a link to a refund obligation of this VAT to the customer).
If the travel agent has already received a full payment of the customer and the agent would like to fully or partly refund this payment due to the cancellation of the trip because of force majeure, a VAT refund can, in principle, be requested on the part that is refunded to the customers.
If the customer decides to cancel his trip and has to pay a cancellation or rebooking fee to the travel agent, which, if necessary, will be deducted from the refund to the traveller, the travel agent may, in principle, also reclaim the VAT paid in proportion to this refund. However, this can be different in case this reimbursement is described as an administrative cost in your general terms and conditions.
If you have any questions on this subject, please contact the authors of this article.