< Back< Work
Next >
Overview of a large banquet hall with a stage and mood lighting at a corporate event

What is the travel agency regulation?

The travel agency regulation: four words that mean nothing to most event professionals—until they suddenly come across them in the middle of a VAT audit.

The travel agency scheme is a special VAT scheme. It is described in the 1968 Turnover Tax Act (Sections 28b through 28l). The scheme is based on the European VAT Directive. The basic principle is simple. Anyone who purchases travel services from third parties and resells them as a package does not charge VAT on the full sales price, but only on the profit margin. That margin is the difference between what you charge the customer and what you yourself paid to external service providers for the travel services: transportation and accommodations.

The regulation is called the "travel agency regulation," but its scope is broader than the name suggests. It applies not only to travel agencies and tour operators. Event agencies that put together travel packages for clients may also be subject to it. In fact, the travel agency regulation also applies to incentive trips, for example, if you purchase flights and hotels from third parties and invoice these to your client as part of an all-in-one event package.

This has direct implications for how you calculate VAT and how you invoice, but also for what your customer is allowed to do for tax purposes with the VAT you charge. Here are the key points: VAT is calculated on the margin, not on the full price. VAT must not be listed separately on the invoice. The customer cannot claim the VAT back as input tax. And for travel services provided by suppliers outside the EU, 0% VAT applies.

It’s not the most exciting set of regulations, but it’s the one you’ll want to be familiar with before you invoice a €50,000 incentive package.

When does the travel agency regulation apply?

Not every event is covered by the travel agency regulation. That’s the good news. The bad news: it’s not always clear when it does apply.

The regulation applies if two conditions are met. The first condition: you purchase travel services from third parties. Travel services include transportation and lodging: flights, trains, buses, hotel rooms, or other accommodations. Catering, entertainment, venue rentals, and activities are generally not included. These are ordinary services and fall outside the scope of the travel agency regulation. The second condition: you sell these travel services in your own name and on your own account as part of a total package to the end customer. Do you simply pass on the costs as an agent or intermediary? Then the regulation does not apply. This applies when you work in the name and on behalf of the customer.

So when does it apply?

For an incentive trip to Lisbon where you book flights and hotels and invoice the client for everything as a single package, the travel agency regulation applies. For a conference in Berlin where you book accommodation for participants and include it in the total package, the accommodation component regulation applies. For a staff party in Amsterdam where you rent a venue, arrange entertainment, and provide catering, but do not purchase transportation or overnight stays, the travel agency regulation does not apply.

Not sure if your event qualifies for the program? Check with a tax advisor before you issue an invoice. The tax authorities are generally not receptive to retroactive adjustments.

How do you calculate the VAT?

Under the standard VAT system, you charge 21% on your selling price. It’s simple and familiar. The travel agency scheme works differently.

VAT is calculated based on the profit margin: margin = selling price to the customer minus the purchase price of third-party travel services. VAT is included in the margin. The calculation is: VAT = margin × 21/121.

Calculation example

Suppose you’re organizing an incentive trip. You invoice the client €12,000 for the travel component (flights and hotels). You paid €9,000 to the airline and hotel. Margin: €3,000. VAT: €3,000 × 21/121 = €520.66. The client pays €12,000, including this VAT. However, they do not see the amount listed separately on the invoice.

The non-travel portion of the package consists of entertainment, activities, and guidance. You simply invoice this at the standard 21% VAT rate based on the sales price. This means you have two separate VAT calculations: the margin scheme for the travel component and the standard system for the rest.

This requires clear record-keeping. You must be able to document, for each event, which costs were incurred for “third-party travel services.” Keep careful records of invoices from transportation providers and accommodation providers. This is not something you can reconstruct after the fact. The tax authorities may ask to see them.

What does the invoice say?

This is where many event agencies go wrong: the invoicing requirements under the travel agency scheme differ from those of a standard VAT invoice.

What is not allowed

Under the travel agency regulations, you are not permitted to list the VAT separately on the invoice. There is no amount, no percentage, and no VAT line item listed for the travel component. This is a legal requirement, not an option.

What must be included

The invoice states the total price including VAT, with a reference to the travel agency regulation. In practice, you use a standard statement. For example: "The special regulation for travel agencies applies to the travel services in this invoice (Art. 28b VAT Act 1968). VAT is not listed separately." Your accountant can provide you with a standard clause that you can use on every relevant invoice.

Impact on the customer

Business clients cannot claim the VAT on the travel component as input tax. They pay VAT, but for them, it is final. It is not a pass-through item. This does not matter for B2C customers. For companies that normally reclaim all VAT, this represents a net increase in costs. The amount is small for a small incentive and substantial for a large event.

You don’t want to have this conversation after the invoice has been issued. Mention the VAT treatment in the quote. Explain what it means for the customer. Make sure there are no surprises when the invoice is received. To learn how to create a transparent quote, read our article on the pitch document →

International events and incentive trips

The travel agency scheme becomes advantageous for events outside the EU, and is sometimes even more favorable.

Services outside the EU: 0% VAT

If you purchase travel services from providers outside the European Union, the zero rate (0% VAT) applies to those specific components. Are you organizing an incentive trip to New York and booking the hotel directly with an American hotel? In that case, the VAT on the margin for that component is 0%. This makes the travel component for trips outside the EU VAT-exempt.

EU Travel Services: Standard Margin Scheme

Is it an incentive trip to Barcelona, a team outing to Berlin, or a conference in Brussels? Flights and hotels purchased from European suppliers are subject to the margin scheme, with the standard VAT rate applied to the margin.

Always split your package

For mixed trips, you split the travel components. For EU travel services, the margin scheme applies, with VAT levied on the margin. For non-EU travel services, the VAT rate is 0%. This requires accurate record-keeping for each supplier and each component. But it pays off: for large incentive trips to distant destinations, the VAT savings can be significant.

Incentive trips are the classic application of the travel agency scheme for event agencies. You purchase flights, hotels, and transfers from external providers, combine them with an inspiring program, and invoice it as a single package. It is precisely this package nature that makes the scheme applicable. And that is exactly why it is so important to be aware of this as early as the planning phase.

Want to learn more about organizing an incentive trip? Read our article →

How do you handle this in practice?

The travel agency policy isn't complicated once you understand it. But it requires you to make informed decisions—starting right from the moment you prepare the quote.

Step 1: Map out your event. Which components do you purchase from third parties? Distinguish between travel services (transportation, accommodation) and other services (entertainment, catering, venue, program). Only travel services provided by third parties are subject to the margin scheme.

Step 2: Calculate the margin for each component. Know what you’re purchasing and what you’re billing for the travel component. Record this in your records. Don’t treat this as an afterthought, but make it a standard routine for every event that includes travel services.

Step 3: Customize the invoice text. Use a standard clause for invoices subject to the travel agency regulations. Your accountant or tax advisor can provide you with a standard text that you can reuse.

Step 4: Communicate proactively with customers. Explain to business customers what the VAT implications are for their own records. They cannot claim a refund on the travel portion of the invoice. This doesn’t have to be a problem, but it shouldn’t come as a surprise.

Live Impact organizes incentive trips and travel packages that may be subject to travel agency regulations. We work with consultants who are knowledgeable about tax matters and ensure that quotes and invoices are accurate. Do you have an event that includes transportation or accommodations as part of the package? We’re happy to help you plan it, including the tax implications.

Read our article on travel expense policies for business events →

Keep an eye out for the travel agency regulation

The travel agency regulation is not a tax oddity. It is a relevant regulation for any event agency that organizes incentive trips, travel packages, or events involving combined travel and accommodation arrangements.

Those who are familiar with it can handle it properly: in quotes, on invoices, and in their records. Those who aren’t familiar with it risk additional tax assessments, surprised customers, and unnecessary disputes during a VAT audit.

This article provides a general overview. For specific application to your situation, please seek professional tax advice. The nuances of the travel agency scheme require an advisor who is familiar with VAT legislation and the events industry.

Are you organizing an event that includes travel services as part of the package? Please contact us at hello@live-impact.nl or via the contact form on our website. We will respond within one business day.

Live Impact. Seriously Fun.

Also read

• Event Marketing: Why a Live Event Makes Your Message Land More Effectively

• Kick-off program: how to create a day that leaves a lasting impression

• Team-building activities: 20 ideas that really work

Frequently Asked Questions

Why do customers choose Live Impact?

Because we provide both the concept and the execution from a single source. Because we’re transparent about the budget, the schedule, and what is and isn’t possible. Because we pay close attention to every last detail. And because we have a database of hundreds of acts and venues that we’ve successfully utilized time and time again. We call that “Seriously Fun” work.

Want to learn more? Schedule an introductory meeting.

What types of companies does Live Impact work with?

We work with medium-sized and large organizations that take their events seriously. From family-owned businesses to publicly traded companies, from healthcare to logistics, from retail to tech. What our clients have in common: they want an event that’s just right. Not an event that’s a carbon copy of last year’s.

Wondering if we're a good fit for you? Schedule an introductory meeting.

Does Live Impact develop concepts, or does it just implement them?

Both. We’re an agency that creates and executes concepts. Because an idea without execution loses its impact, and execution without an idea feels empty. With us, they come together, so nothing gets lost along the way between what’s conceived and what’s built. One team, one story, from the first sketch to the final lighting cue.

Want to learn more about our approach? Schedule an introductory meeting.

What exactly does Live Impact do?

Live Impact is an agency that designs and produces corporate events. We do both intentionally: the concept and production come from a single source. This ensures that the vision remains intact from the initial sketch to the final lighting cue. We organize staff parties, anniversaries, kick-offs, client events, conferences, and family days.

Want to learn more? Schedule an introductory meeting.

What is the process for collaborating with Live Impact?

We start with an in-depth discussion about your needs, your team, and your story. We’ll then provide an initial concept proposal with a budget. Once approved, we’ll develop the plan and handle everything from the venue to the entertainment. On the day of the event, we’ll make sure everything runs smoothly. Afterward, we’ll review the event. One point of contact, no hidden handoffs.

Want to learn more? Schedule an introductory meeting.

Feeling inspired?

Thanks!
Oops! Something went wrong while submitting the form.