Determining and taxing the margin on tourism services

Service-Tax

The VAT procedure, the margin for the provision of tourism services is regulated in Art. 119 of the Value Added Tax Act. According to its regulations, the tax base for the provision of tourism services is the amount of the margin less the amount of tax due. At the same time, the margin should be understood as the difference between the amount to be paid by the buyer of the service and the actual costs incurred by the taxpayer for the purchase of goods and services from other taxpayers for the direct benefit of the tourist.

The margin is taxed irrespective of who purchases the tourism service, where the taxpayer:

  • acts for the buyer of the service on his own behalf and for his own account;
  • when providing the service, it purchases goods and services from other taxable persons for the direct benefit of the tourist (Article 119 (3)).

Among entrepreneurs using this type of settlement, there are often doubts - if a loss was incurred on a given service (a negative margin was obtained), can this margin be taken into account when determining the tax base? Such a case was the subject of the judgment of the Supreme Administrative Court of 10 April 2013, file ref. act I FSK 774/12:

“(...) The taxpayer providing tourism services is obliged to account for a given period based on the economic result achieved in that period, defined by the legislator as" margin ". When determining this amount for the purposes of settlement, he should therefore take into account the effect of all his sales in that period, which may be positive or negative for individual transactions. Their sum, taking into account both the positive and negative results of individual transactions, will only allow for the correct determination of the tax base for the sale of tourism services, thus implementing the basic principles of value added tax, which are the principles of multiphase and proportionality, which require tax only existing at a given stage of trading increase in value (...) ”.

It is worth noting that a similar position was also adopted by the Supreme Administrative Court in its judgment of August 26, 2010, file ref. I FSK 1323/09 or the Provincial Administrative Court in Poznań in the judgment of 24 July 2012, file ref. act I SA / Po 452/12, thus indicating the possibility of taking into account the negative margin when determining the tax base for tourist services. It should be borne in mind that these judgments were issued in individual cases and do not constitute a general interpretation of the law.