IHG Commission Services Billing Process –Guidance for EU travel agents outside the UK
The IHG Commission Services program computes commissions due for participating travel agents worldwide. The functions branded hotels, for which a commission is due at an agreed rate. The rationale for invoicing in accordance with the IHG program is that commissions are correctly calculated on occupancy rather than bookings made, so the IHG program provides correct commission calculations without the need for subsequent corrections as a result of cancellations. A simplistic view is that the travel agents provide services to the hotels, but this is not the correct legal structure. Each of the travel agents enters into an agreement with Six Continents Hotels Inc. (SCH) for the provision of reservation services into the IHG estate. Meanwhile each of the hotel owners / franchisees enters into an agreement with IHG whereby it agrees to receive reservation services made by the participating travel agents. Changes to VAT Rules Changes were introduced by the so called ‘VAT Package' to the VAT place of supply rules for cross border supplies of services. Under the old rules, VAT was due whenever the travel agent and the hotel were located in the same country (as a service related to land). Under the new ‘general rule' introduced by the VAT Package (Article 44 EC VAT Directive (2006/112/EC)), where reservation services are supplied to a business in another territory, the place of supply is the territory in which the recipient is located. This potentially created uncertainty as the two rules led to contradictory results. However the EC Commission VAT Committee has advised that the new general rule should take precedent over the old regime. Impact on Billing Arrangements As a result of the above changes, the services provided by VAT registered travel agents in EC countries outside the UK are made to a US company and therefore are not subject to VAT. Travel agents should address commission invoices to SCH. However, the invoices may be retained on file as IHG Commission Services calculates the commissions due to your agency through its centralised program.
If you are having trouble finding the answer you seek please Contact Us.