TOMS VAT Scheme: Standstill Clause Confirmed for Non-EU Travel (CJEU T-221/25)

In its judgment of 25 March 2026, the General Court of the Court of Justice of the European Union confirmed the continued application of the standstill clause to the VAT treatment of travel services performed outside the European Union under the TOMS regime.

In practice, this means that Member States which were already taxing such services before 1 January 1978 — i.e. prior to the implementation of the Sixth Council Directive 77/388/EEC — may continue to do so by way of derogation, even where EU VAT rules would normally provide for an exemption.

Importantly, this derogation does not require an explicit provision in national law. The Court confirms that the continuation of taxation may result implicitly from the legislative framework, provided that the Member State had already exercised this option before that date.

Furthermore, subsequent national legislative amendments which replace earlier provisions with new rules that implicitly maintain the taxation of travel services outside the EU do not invalidate the application of the standstill clause, as long as they remain substantively consistent with the previous regime.

THE GENERAL COURT (Fifth Chamber, sitting with five Judges) hereby rules:

1.      Article 28(3)(a) and (4) of and Annex E(15) to Sixth Council Directive 77/388/EEC of 17 May 1977 …, and Article 370 of and Annex X, Part A, point (4), to Council Directive 2006/112/EC of 28 November 2006 on the common system of VAT must be interpreted as meaning that the derogating regime that they establish does not require a national statutory provision expressly establishing a derogation from the exemption from value added tax (VAT) for the supply of services by travel agents in relation to travel outside the European Union laid down in Article 26(3) of Directive 77/388 and in Article 309 of Directive 2006/112.

2.      Article 28(3)(a) and (4) of and Annex E(15) to Directive 77/388 and Article 370 of and Annex X, Part A, point (4), to Directive 2006/112 must be interpreted as meaning that a legislative amendment that took effect after the entry into force of Directive 77/388, which deletes an express legislative provision under which the supply of services by travel agents in relation to travel outside the European Union was not exempt from VAT and replaces it with provisions from which it follows only implicitly that the supply in question remains taxable, does not have to be regarded, by reason of that fact alone, as legislation that is not identical in its main points to the previous legislation and that is based on a different approach.

Case T-221/25

The case concerns a dispute between the Belgian tax authorities and TUI Belgium NV, representing nine travel companies forming the Travel4You group.

The group sought a refund of VAT paid between November 2004 and December 2014 on travel services supplied outside the EU, arguing that the Royal Decree of 28 December 1999 had removed their liability to VAT.

Prior to 1 January 2000, intermediary services relating to transactions outside the EU were generally exempt in Belgium. However, travel agents supplying travel services were expressly excluded from that exemption and remained subject to VAT.

Following the legislative changes, TUI Belgium argued that the removal of this explicit exclusion meant that such services should now be exempt.

The Court’s position

The Court held that the VAT taxation of travel services outside the EU remained applicable under Belgian law, despite the legislative amendments.

It confirmed that:

• the standstill clause does not require an express derogation in national law;
• implicit continuation of taxation is sufficient, provided that the Member State already taxed those services before 1 January 1978;
• legislative changes do not invalidate the standstill regime where they do not alter the substantive nature of the taxation.

This ruling confirms that the standstill clause operates based on the substantive continuity of taxation rather than on the formal wording of national legislation.

TOMS regime: opportunities & risks

The TOMS (Tour Operator Margin Scheme) applies to businesses that deal with customers in their own name and use supplies of goods and services provided by other taxable persons in the provision of travel services.

Under this VAT scheme:

• travel services supplied within the EU are subject to VAT on the margin, with no right to deduct input VAT;
• travel services performed outside the EU are, in principle, exempt, unless a Member State applies the standstill clause provided for under EU VAT law.

Despite ongoing harmonisation efforts, the application of TOMS still differs across EU Member States.

Key differences include:

• VAT treatment of travel services performed outside the EU;
• scope of services falling within the TOMS scheme;
• VAT treatment of MICE activities (Meetings, Incentives, Conferences and Exhibitions);
• application of TOMS to B2B and B2C transactions;
• treatment of non-EU service providers.

Outlook

The European Commission is currently assessing further harmonisation of the TOMS regime.

A public consultation was launched in July 2025, and a VAT reform proposal is expected by the end of 2026.

Important : The TOMS regime is not limited to businesses whose core activity is travel. Any company reselling travel services — even on an occasional basis — may fall within its scope.

While this may reduce VAT liabilities in certain cases, the main risk lies in the denial of input VAT recovery on travel-related costs.

About BTOBNICE

BTOBNICE supports international companies with European VAT compliance and VAT recovery relating to travel and MICE (Meetings, Incentives, Conferences and Exhibitions).

Contact our experts for further information or assistance: contact@btobnice.com

Source : CURIA