VAT for Tour Operators in Cyprus: TOMS
Tour operators pay VAT only on their margin — the difference between what they charge customers and what they pay for the underlying travel services.
In this guide
How VAT applies to tour operators in Cyprus. TOMS margin scheme, how to calculate VAT on packages and when TOMS applies to travel businesses.
- Standard rate
- 19%
- Registration threshold
- €15,600
- Capital Goods Scheme, property
- 10 years
- Keep VAT records for
- 6 years
VAT on
Margin only
Not full sale price
Rate
19%
On margin
Input VAT
Not reclaimable
On TOMS supplies
Applies to
Bought-in supplies
Resold as package
What is the Tour Operators Margin Scheme?
The Tour Operators Margin Scheme — TOMS — is a special VAT scheme for businesses that buy in travel services — accommodation, transport, excursions, meals — and resell them to travellers as a package. Under TOMS VAT is calculated only on the margin — the difference between what the operator charges the customer and what the operator paid for the underlying services. This avoids the operator having to register and account for VAT in every country where the travel services are physically supplied.
Who does TOMS apply to?
TOMS applies to any business that buys in travel services and resells them — not just businesses that call themselves tour operators. A hotel that buys in excursions and includes them in a package rate, a travel agent that buys flights and accommodation and sells them as a package, and an incentive travel company that arranges travel for corporate clients can all fall within TOMS. The key test is whether the business is buying in services from third parties and reselling them as part of a travel package to travellers. If so TOMS likely applies.
How TOMS margin is calculated
The TOMS margin for a period is the total amount received from customers for designated travel services minus the total amount paid to third parties for those same services in the same period. VAT is then calculated on the margin using the VAT fraction — margin × 19/119 for standard-rated margin. The margin can be calculated on a global basis — pooling all TOMS sales and costs for the period — rather than trip by trip. If the global margin is negative — costs exceeded income — no VAT is due but the negative margin cannot be carried forward.
Services covered by TOMS in Cyprus
- Hotel and accommodation bought from hotels and sold to travellers
- Flight tickets bought from airlines and sold as part of a package
- Coach and transport services bought and included in a package
- Excursions and tourist activities bought from local operators
- Meals and catering bought from restaurants and included in packages
- Car hire bought from rental companies and included in packages
- Guide services bought from guides and included in packages
TOMS only applies to bought-in services — services purchased from third parties and resold. If a tour operator provides services from their own resources — their own hotels, their own coaches — those self-supplied services are outside TOMS and subject to standard VAT rules. Distinguishing between bought-in and self-supplied elements is essential for correct TOMS calculations.
No input VAT recovery under TOMS
The trade-off for TOMS simplicity is that no input VAT can be recovered on the bought-in travel services that form part of the TOMS calculation. The margin scheme approach recognises that the VAT embedded in the underlying services has already been accounted for by the original suppliers. However input VAT on overhead costs not directly related to the bought-in services — office costs, staff, marketing — can still be recovered in the normal way.
Key takeaways
- ●TOMS applies to businesses buying in travel services from third parties and reselling them to travellers
- ●VAT is charged only on the margin — the difference between customer receipts and third-party costs
- ●Input VAT on TOMS bought-in supplies is not recoverable — only overhead input VAT can be reclaimed
- ●TOMS applies regardless of whether you call yourself a tour operator — the test is the nature of the activity
- ●A negative global margin in a period means no VAT is due but cannot be carried forward
Frequently asked questions
Work out the VAT on your own figures
Add or remove VAT at any Cyprus rate, with the rates from our facts table.
Open the VAT calculator →