Sep 19

Spanish DMC association battles VAT increase

Spain DMC's logoSpain DMC’s members had sent a complaint letter to Spanish Tourism Department, among others governing bodies, explaining how the VAT rate rise will affect DMC sector competitiveness. On the letter, the association exposes its concerns about the implementation of the increase on travel agencies segment and expresses its “indignation” with the conservative government.

The association proposed a change on the new VAT legislation and the way it taxes some touristic services. “In case the proposition was accepted, it will cost nothing to the public funds”, states the letter. Nevertheless, the Government claimed technical reasons to refuse the proposal.

Executive director Luis Díaz predicted a week ago many travel agencies and DMC companies would close down if the VAT rate rise does not change. Diaz explained the main problem as it follows: “The Government increased the VAT rate on travel companies margin benefits but maintains the reduced VAT rate for the services they contract, such transportation and accommodation”. Spain DMC considers this gap “unfair”.

Golf courses and meeting registrations are now taxed with 21%; before August the rate was just 8%. Those increases will affect the price of the services offered by incentive agencies and similar companies, a fact that will reduce the touristic sector competitiveness. And, as everybody knows, tourism is the main economic sector in Spain.

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