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HMRC internal manual

VAT Place of Supply (Transport)

HM Revenue & Customs
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Passenger transport: Place of supply rules

Main Rule

The place of supply of passenger transport is the country where the transport takes place, to the extent that it takes place in that country. Most passenger transport is still zero-rated within the UK under Schedule 8, Group 8, item 4 and such transport outside the UK is outside the scope of UK VAT. Passenger transport is not however relieved from VAT in all other Member States of the EC, so transport operators belonging in the UK but providing travel through other Member States may be liable to account for VAT, subject to the local rules, in each Member State through which they pass.



Guidance on the liability of passenger transport can be found in the manual covering the liability of transport and in Notice 744A (Passenger Transport).


Passing through another country

Provided the means of transport is not scheduled to put in, land or stop in any other country, journeys which begin and end in the same country, but take place partly outside that country, are treated as taking place wholly within that country. This applies even if the journey is part of a longer journey involving travel to or from another country.

For examples, see notice 744A (Passenger Transport)


Pleasure cruises and Ferries

A pleasure cruise is normally a single supply, (see the decision of the Tribunal, confirmed by the High Court, in the case of The Peninsular & Oriental Steam Navigation Co (No 2) (QB [1996] STC 698)), and this extends to the transport of a passenger with accompanying baggage or a vehicle, for instance on a ferry. In each case, the supply is treated as passenger transport, supplied in the country where the transport takes place. If supplied in the UK, such a supply may be zero-rated under the VAT Act 1994, Schedule 8, Group 8, item 4. In other cases where there is more than one supply, the place of supply will still be where the transport takes place, although only the supply of passenger transport will be zero-rated under item 4 of Group 8.


Inclusive tours

Operators who buy and sell passenger transport, or supply passenger transport together with other supplies, may need to use the Tour Operators Margin Scheme. For further information see the manual covering VAT schemes and Notice 709/5 (Tour operators’ margin scheme).