If you are interested in setting up a retail travel agency, you should know what services they provide, what types exist and what the special tax and accounting regime for travel agencies consists of.
What is a retail travel agency
The retail travel agency is one that has direct contact with customers to offer them different types of trips. The retail agency will always sell to the end customer, never to other agencies.
serve as mediators between wholesale travel agencies and customers. Retail travel agencies sometimes partner with other agents to gain competitive strength in dealing with their suppliers.
What is a retail travel agency for?
retail travel agencies They provide their clients with advice and offer them a trip adapted to their preferences and budget.
Retail agencies can offer their clients closed packages who have previously bought from wholesale agencies, can create own packages with services to which they have access or can offer individual services. Its objective is to develop and sell services to tourists so that the trip they want is completely to their liking.
Types of retail travel agency
- Broadcaster. This type of agency offers trips created by wholesalers customers requesting places or experiences similar to existing packages.
- Receiver. Receive travelers that arrive at the location where the agency is located.
- Online sales agencies. They are dedicated to sale of all kinds of travel services over the internet. They do not usually have specialized advice and their main advantage is usually that they offer low prices. They are also known as OTA’s.
- physical agencies. This is the most traditional type of retail travel agency. In her the client receives direct treatment and your preferences and budget are listened to. Subsequently receive advice and a travel offer appropriate to your circumstances.
- Specialized. These companies they always sell trips of the same typewhich they know in depth. They may specialize in senior travel, multi-adventure, or learning English abroad.
Difference between retail and wholesale travel agency
The operation of retail and wholesale travel agencies is very different.
- the retail agency listens to the requests of the clients and is in charge of creating for them the trip they want, with the necessary services for it. They can sell combined trips, packages or individual services.
- the wholesale agency creates vacation packages and stays in contact with hotels, airlines and guides, to include different excursions. In addition, they have retail agencies that are responsible for offering these packages to the end customer.
How does a retail travel agency work?
Due to the type of services that travel agencies sell, they have certain peculiarities in terms of accounting and taxation.
Travel agency accounting has certain differences compared to other companies in terms of how to account for income and perform economic analysis. Travel agency revenue can be to record in two different ways:
- Given the total amount of the service through the retail price.
- accounting the total amount of commissions received for services sold.
The economic analysis of a travel agency is done fundamentally through the profit and loss account, Also called income statement. This document reflects the income, expenses and results that a company has obtained in the accounting year.
As a complement to the income statement and to complete the information for the economic and financial analysis ratios are taken into account.. These are calculated through the ratio between two quantities or measurements. For example, the debt ratio is calculated by dividing the total obligations of a company by its net worth, and with it, the dependency on external financing that a business has to face payments is known.
Do you run a travel agency? Well, that’s great and when you are about to ask for payments from your clients, remember to get your billing a professional structure through a travel agency invoice template. Such agency templates come up with pre-designed columns where you can mention the services offered, along with a brief description and price break-up. These templates are specially designed for travel agencies and can be customized easily with your specific vacation package details.
Travel agencies have specific regimencollected in articles 141 to 147 of Law 37/1992 on Value Added Tax (LIVA).
It applies whenever the following are given circumstances:
- The agency acts on its own behalf with respect to travelers.
- Use goods or services of other businessmen or professionals.
The main specialty of this regime is that, although VAT is passed on, there is no obligation to itemize it on the invoice to the customer. In this way the client pays it in the total amount but cannot deduct it.
Until December 31, 2014, 6% was included in the total amount for VAT, specifying it in the issued invoice. However, as of 2015, this system has changed and they are no longer required to specify that amount of VAT on the invoice, although if they do not, they will not be able to opt for the general VAT regime either.
As soon as to the tax base of the invoice will be the gross margin of the travel agency, that is, the difference between the price charged to the client for the services and the cost of the goods that he has acquired to provide them.
In the special regime of travel agencies, input VAT may not be deducted when it corresponds to the acquisition of goods and services to carry out the provision of services to the client. The rest of input VAT is deductible.
If a travel agency wants to deduct VAT from the acquisition of services and goods for the benefit of the client, since 2015 have the possibility of opting for the application of the general regime instead of the special regime of travel agencies. If they do, they must notify customers of the application of said regime or not specify the application of the special regime for travel agencies.
Because the taxation and accounting of travel agencies follow special rules, it is important to have specialized advice with adapted software.