§ Mr. WarrenTo ask the Chancellor of the Exchequer how he will implement value added tax on United126W Kingdom registered passenger cruise liner operations when their passage is partially, or wholly, outside EEC territorial waters; and if he will make a statement.
§ Mr. Lilley[holding answer 21 March 1988]: It is necessary to distinguish between supplies by the cruise lines themselves and supplies by tour operators of places on cruise ships. The former are only liable to United Kingdom VAT to the extent that the cruise is in United Kingdom waters. As regards supplies by tour operators, tour operators based in the United Kingdom are liable to United Kingdom VAT on their gross margin attributable to the part of the cruise undertaken in the territorial waters of EC member states, including the United Kingdom. The apportionment of the margin between EC and non-EC elements will have to be done on the basis of the number of days per cruise spent in EC waters or travelling between EC ports. Similar apportionments will have to be done for coach tours taking in both EC and non-EC countries.
§ Mr. WarrenTo ask the Chancellor of the Exchequer which EEC nations have implemented value added tax charges on passenger cruise line operations; and what information he has as to the reasons for delay by certain countries in implementing such charges.
§ Mr. Lilley[holding answer 21 March 1988]: There is no detailed information readily available on the practices of other member states in this respect, but there is no special VAT relief for passenger cruises under the EC sixth VAT directive. As regards tour operators, only Ireland and Denmark have not imposed tax on tours operators' margins. I understand that they claim not to do so under a transitional derogation in article 28 of that directive.