What is the travel agency regulation?

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. First: you purchase travel services from third parties. Travel services include transportation and accommodations—flights, trains, buses, hotel rooms, or other lodging. Catering, entertainment, venue rentals, and activities are generally not included. These are standard services and fall outside the scope of the travel agency regulation. Second: you sell these travel services in your own name and for your own account as part of a total package to the end customer. If you simply pass on the costs as an agent or intermediary—in the customer’s name and on their behalf—then the regulation does not apply.

So when does it apply?

An incentive trip to Lisbon where you book flights and hotels and invoice the client as a one-stop-shop: travel agency terms apply. A conference in Berlin where you book accommodation for participants and include it in the total package: applies to the accommodation component. A staff party in Amsterdam where you rent a venue, arrange entertainment, and provide catering, but do not purchase transportation or overnight stays: travel agency rules do not apply.

Not sure if your event qualifies under the rules? Check with a tax advisor before you issue an invoice. The tax authorities are generally unwilling to accept retroactive adjustments.

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—but does not see the amount listed separately on the invoice.

For the non-travel portion of the package—entertainment, activities, and guidance—you simply charge the standard 21% VAT 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 later. The tax authorities may ask to see them.

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. No amount, no percentage, and no VAT line item 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 statement such as: "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—not a pass-through expense. This does not matter for B2C customers. For companies that normally reclaim all VAT, this represents a net increase in costs. A small amount for a small incentive. A substantial amount 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, and make sure there are no surprises when the invoice arrives. To learn how to create a transparent quote, read our article on the pitch document →

The travel agency policy becomes more attractive—and sometimes more advantageous—for events outside the EU.

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 effectively makes the travel component for trips outside the EU VAT-free.

EU Travel Services: Standard Margin Scheme

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

Always split your package

For mixed trips—partly within the EU and partly outside the EU—you split the travel components. EU travel services: margin scheme with VAT on the margin. Non-EU travel services: 0% VAT. This requires accurate record-keeping for each supplier and each component. But it pays off: for large incentive trips to distant destinations, the VAT benefit 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 them 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 →

The travel agency policy isn't complicated once you understand it. But it requires careful decision-making—starting right from the quote stage.

Step 1: Take stock of 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 exactly what you’re purchasing and what you’re billing for the travel component. Record this in your records—not as an afterthought, but as a standard procedure 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: Proactively communicate with customers. Let business customers know what the VAT implications are for their own records. They cannot claim a refund on the travel portion of the VAT. This doesn’t have to be a problem—but it shouldn’t come as a surprise.

Live Impact organizes incentives 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, including with tax compliance.

Read our article on travel expense policies for business events →

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.

Organiseer je een event waarbij reisdiensten deel uitmaken van het pakket? Neem contact op via philip@live-impact of via het contactformulier op onze website. We reageren binnen één werkdag.

Live Impact. Seriously Fun.