EU VAT case law

The standstill clause applies even if a Member State has amended its VAT provisions. What matters is that continuity of taxation has been maintained.

Judgment of the General Court of 25.03.2026, T-221/25, TUI Belgium.

Background

• Article 26.3 of the Sixth VAT Directive provided that services of travel agents supplied outside the territory of the Community are VAT exempt.
• However, in accordance with the relevant provisions of the Sixth VAT Directive and, later, VAT Directive 2006/112, Member States could continue to tax such services (travel outside the territory of the Community) if they had taxed them as of 1.01.1978.
• Belgium taxed such services and continued to do so.
• However, as of 1.01.2020 it amended the wording of its regulations. The result was that such services (travel arrangements provided by travel agents for trips outside the EU) continued to be subject to VAT - but the legal framework (legislative technique). This change took effect on 1.01.2020.
• TUI Belgium sold vacation travel packages.
• It applied for a VAT refund for travel outside the European Union.
• It argued that such trips were no longer subject to VAT as of 2020, since Belgium had amended the relevant regulations - even though the effect of taxing such services remained in place. It argued that, as of 1.01.2020 Belgian law no longer explicitly provides for a provision derogating from the exemption. Taxation is only implicitly included in Belgian regulations. And if so - Belgium has no right to tax those services.
• The tax authorities argued that such services are still subject to VAT in Belgium because - despite the amendment to the law - the effect remains the same: travel outside the EU was and continues to be subject to VAT in Belgium.

The Court’s reasoning

• The VAT directive provides that travel agent services outside the EU are exempt under Article 153 of the VAT Directive (28).
• However, another article of the Directive introduced a derogation regime applicable to travel outside the EU. According to it member states may derogate from exemption for such travel and - in effect - tax them (29–30).
• There is nothing in the provisions of the directive that would require a Member State to adopt an expressis verbis provision that explicitly establishes a derogation from the exemption. It is sufficient that the activity in question was subject to tax in 1.01.1978 (32-33).
• Therefore, Member States may choose the legislative technique they deem appropriate to derogate from exemption (34).
• Nevertheless, such a technique must comply with a general principle of EU law - namely, legal certainty (35).
• In this case, the supply of services by travel agents in relation to travel outside the European Union was subject to taxation as of 1.12.1977 and remained so as of 1.01.2020. Although the provisions changed as of 1.01.2020, they implicitly led to the same conclusion as before that change (with regard to the taxation of travel outside the EU) (36).
• Such provisions (which, prior to the amendment, explicitly stated that travel outside the EU was excluded from the exemption, and which, after the amendment, implicitly state that travel outside the EU is subject to tax) are, in principle, identical “in their main points” (39–48).