The Confederation of Balearic Business Associations has given its support to the legal approach made to the Spanish government for the recovery of twenty million euros of IVA (VAT) in respect of invoices to Thomas Cook.
This approach has been officially made by a firm of lawyers representing a Majorcan hotel chain. The government is being asked to process the request as quickly as possible and to return IVA handed over by hotel companies for invoices that have not been paid by Thomas Cook and almost certainly won't be paid. It is estimated that, in total, the Balearic hotel sector has forwarded 20 million euros of IVA for Thomas Cook invoices.
A justification for demanding the return of the IVA is that Thomas Cook AG, although a German company, was permanently established in Spain and had human and technical resources in the country. Some 2,500 people were directly employed, most of them in the Balearics and the Canaries. The legal firm points to an article in the 1992 law for value added tax in arguing that Spanish legislation should apply in rectifying unpaid invoices for a debtor business operating in Spain.
A further justification lies with an EU directive of 2006 and a recent interpretation of this by the European Court of Justice that corresponds to a case that had been brought before the Supreme Court in the Czech Republic. The European Court determined that there is the "possibility" for member states to exclude payments where these are "contrary to the principle of the neutrality of value added tax".