Taxable supply? Or compensation?

In the joined cases of Air France-KLM and Hop!-Brit Air SAS (CJEU C‑250/14 and C‑289/14), the European Court has decided that the price of French airline tickets paid by passengers constituted consideration for the transport service offered by the airline company, and that price was subject to French VAT which needed to be accounted for and paid. The airlines therefore had to pay VAT on the amounts paid for tickets that passengers did not use.

With careful planning in the UK, however, such amounts can be considered as compensation in nature and outside the scope of VAT.

For further information and help on compensation and outside the scope supplies, please contact the TaxDesk on 0845 4900 509 and ask for Kevin Hall.