APPLICATION OF VAT ON TOURISM ACTIVITIES

Abstract

The tourism industry is now subject to a set of rules that regulate and constrain this sector. Suppliers and users of tourism products and services are subject to different VAT rates in the operations of transfer of goods and services. VAT ultimately influences the user of products and tourism services in the choices of various goods and services, which may constitute a disincentive for the development of tourist activities on behalf of economic agents from other member states of the European Union.

In addition, many of the rules set out in the VAT code are too complex due to several particularities and exceptions, and do not facilitate the application of VAT. The European Union has, however, constrained the discretion of member states, forcing them to act within the rules of EU law and not to adopt rates contrary to the VAT Directive 2006/112/EC. Several Member States have adopted standard rates and reduced rates of taxation, only a few apply super-reduced rates. Portugal is a country with different rates depending on the goods and tourist services.