The German Finance Ministry has decided to defer a value-added tax on Germany vacations until 2027, according to the European tour operator trade group ETOA.
It's a victory for tour operators who sell Germany, as the VAT would have made vacations there more expensive for those purchasing packages outside of the EU.
In addition to making Germany vacations more expensive, the tax would require tour operators to register and file tax returns in Germany, which they previously had not been required to do.
The VAT has been postponed annually since 2021, the year it was originally supposed to go into effect. Its latest postponement came earlier this year in January when the VAT was deferred another 12 months for further review.
ETOA said last week in a webinar update that the German Finance Ministry may have decided to defer the VAT until 2027 largely because law reforms are expected to take place in the near future.
"We think that they're postponing it not purely out of the practical problems of implementing it, but also because the European Commission has said that they're about to reform these laws," said ETOA CEO Tom Jenkins on a July 24 webinar call with members.
However, Jenkins added that Croatia has begun to introduce its own VAT similar to Germany's, and the country has not deferred its decision to implement the additional tax rules, which he called a "slight problem."
Jenkins cautioned tour operators currently selling Croatia outside of the EU to be registered for the VAT in Croatia and to account for the tax.