Unfair VAT rules are pricing Europe's tour operators out of their own market, a conference in London will be told today.

The European Tour Operators Association wants European Union tax changes to ease the pressure and help boost the flagging sector.

The ETOA squarely blames current EU VAT rules, which make it more expensive for EU-based tour operators to "sell" Europe to tourists than for operators outside the EU.

A call for VAT reforms to restore fair competition will come at an ETOA seminar in London attended by senior European Commission officials.

Travel and tourism is the largest sector of the European economy - but operators are battling to keep their market share of the "inbound" tourism trade, the gathering will hear.

Under current rules, EU-based operators are subject to the Tour Operators Margin Scheme (Toms), which applies VAT on the gross profits of businesses selling holidays in EU member states. VAT is paid at the rate applicable in the country of operation - 17.5% in the UK.

But operators based outside the EU are exempt from Toms, making it virtually impossible, says the ETOA, for the EU-based operator to compete with his non-EU-based counterpart to bring tourists to Europe.

Some EU operators have already moved outside the EU to avoid the tax, and demands are growing for changes to help European operators better promote their own part of the world to tourists.