TOMS / VAT Margin Calculator
Calculate VAT due on your tour operator margin under European margin schemes. Select your country, enter selling price and costs, and get instant results.
Package Details
Hotels, flights, transfers, activities purchased from third parties for this specific trip.
TOMS (Tour Operators Margin Scheme)
Under TOMS, VAT is not shown separately on the invoice to the client. The margin is treated as VAT-inclusive.
Calculation Results
Complete the verification above to see your calculation results.
This calculator is for informational purposes only. It provides an estimate based on standard margin scheme rules. Always consult your accountant for your specific situation. Tax rules may have exceptions not covered here.
Understanding VAT Margin Schemes for Tour Operators
The Tour Operators Margin Scheme (TOMS) and its European equivalents are special VAT regimes designed for businesses that buy and resell travel services. Instead of charging VAT on the full selling price, operators pay VAT only on their profit margin — the difference between what they charge the client and what they pay their suppliers.
How does the margin scheme work?
Under the margin scheme, you calculate VAT as follows: take your total selling price to the client, subtract all third-party costs (hotels, flights, transfers, guides, activities purchased from other businesses), and apply the country-specific VAT rate to the resulting margin. This margin is treated as VAT-inclusive, meaning you extract VAT from it rather than adding it on top. The key restriction is that you cannot reclaim input VAT on the bought-in travel services.
Why does the margin scheme exist?
Travel packages typically involve services supplied in multiple countries. Without the margin scheme, a tour operator would need to register for VAT in every country where services are performed. The margin scheme simplifies this by allowing the operator to account for VAT only in their country of establishment, applying a single rate to their margin regardless of where the services are delivered.
Rates by Country
United Kingdom
TOMS (Tour Operators Margin Scheme)
20%
VAT Notice 709/5
Italy
IVA sul Margine (Art. 74-ter DPR 633/72)
22%
Art. 74-ter DPR 633/72
France
TVA sur la Marge (Art. 266-1-b CGI)
20%
Art. 266-1-b CGI
Germany
Margenbesteuerung (§25 UStG)
19%
§25 UStG
Spain
REAV — Régimen Especial de Agencias de Viajes
21%
Art. 141-147 Ley 37/1992
Portugal
Regime da Margem (Art. 48º CIVA)
23%
Art. 48º CIVA
Worked Example
A UK tour operator sells a 7-night package to Tuscany for £5,000. The direct costs are: hotel £2,100, flights £800, private transfers £300, cooking class £150, wine tour £100 = £3,450 total. The gross margin is £5,000 - £3,450 = £1,550. Under TOMS, this margin is VAT-inclusive at 20%, so VAT due = £1,550 × 20/120 = £258.33. The net margin after VAT = £1,291.67. Note: VAT is extracted from the margin (not added on top) because the margin is deemed to include VAT.
Frequently Asked Questions
Do I need to show VAT separately on my invoice?+
In most margin scheme countries (UK, Italy, France), you do NOT show VAT separately on invoices to clients. The price is presented as all-inclusive. Germany has specific requirements — consult your Steuerberater.
What happens if I have a negative margin?+
If your costs exceed your selling price (negative margin), no VAT is due for that transaction. However, you cannot carry the negative margin forward or claim a VAT refund on it. The loss is simply absorbed by your business.
Can I reclaim VAT on my bought-in travel services?+
No. Under margin schemes, input VAT on third-party travel services (hotels, flights, etc.) cannot be reclaimed. This is the trade-off for the simplified single-country VAT accounting. You CAN still reclaim VAT on your own business overheads (office rent, software, etc.).
Does this apply to services I provide with my own staff?+
In-house services (e.g., your own guides, your own vehicles) are generally taxed under the normal VAT rules, not the margin scheme. The exact treatment varies by country. In Italy, in-house services within a package are taxed at 22% on cost, separate from the margin calculation.
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