Germany Reverses Course on Tour Tax

A proposed tax on Germany tour vacations sold by companies outside of the European Union has been scrapped for at least one year. The tax law, which would have made vacations to Germany more expensive, would also have required non-EU tour operators to file tax returns in Germany.

Tour operators and associations praised the decision and expressed hope that it would be permanent.

“NTA welcomes the reprieve, both for our members in Germany as well as for our tour operators here in North America,” said Catherine Prather, president of the National Tour Association. “The value-add tax would have significantly increased the cost of travel in Germany at a time when tour operators are already dealing with elevated prices, which they must either absorb or pass on to their customers. I hope Germany will reconsider this VAT altogether. Tour operators need considerable lead time to plan, market, and book international travel, so any ongoing uncertainty about this VAT will be problematic for travel to Germany.”

The USTOA also expressed hope that the reversal will be permanent. “While the tour operator members of USTOA are relieved about the postponement of the German VAT tax, the word ‘postponement’ is still concerning as there is little clarity on what 2024 holds. USTOA will continue to work with ETOA to educate German authorities about the negative impact the proposed tax will have on selling travel to and within Germany,” the Association said in a statement. 

Tauck’s president Jennifer Tombaugh echoed the USTOA. “While we certainly applaud the postponement, concerns remain,” she said. “Ideally, German officials will abandon this ill-advised tax entirely and certainly through 2024, which we and other tour operators are already planning and pricing.  If they insist on considering such a tax, they should wait until the EU completes its current evaluation of its TOMS (Tour Operator Margin Scheme) policy and issues its recommendation. I cannot emphasize enough: the proposed tax remains a bad idea that will ultimately hurt Germany’s tourism industry.”

“With Germany dropping the implementation of the German vacation tax for 2023, they’re keeping travel to the country accessible for those seeking a guided vacation with a tour operator,” Melissa DaSilva, president of TTC Tour Brands, North America, told TMR.  TTC Tour Brands operates brands such as Trafalgar, Insight Vacations, Luxury Gold and Contiki, among others.

“Germany is consistently one of our top destinations as a result of in-depth regional and European Discovery tours and a country we hope to continue to help travelers explore,” she added. “This decision is good news for travelers. An added tax on travel to Germany would have an impact on prices, which may affect bookings on our itineraries as German product will have higher increases than other European destinations. In a time when travel is starting to come back to pre-pandemic levels, it’s important that we remove as much uncertainty from the travel process as possible and keep travel with tour operators simple.”