VAT treatment of vouchers
On 27 June 2016, the Council of the EU announced that it has adopted a Directive (EU 2016/1065) on the VAT treatment of vouchers. The Directive is aimed at clarifying and harmonizing the EU rules on the VAT treatment of vouchers.
The Directive sets out to reduce the risk of mismatches in national tax rules leading to double taxation, non-taxation or other undesired consequences. The Directive defines single-purpose vouchers (SPVs) and multi-purpose vouchers (MPVs) and sets rules to determine the taxable value of transactions in both cases.
Member States have until 31 December 2018 to transpose the Directive into national laws and regulations, before applying its provisions from 1 January 2019. The Directive’s provisions will only apply to vouchers issued after that date.
Malta has by means of LN 348 of 2017 issued new regulations which implement the provisions of the above-mentioned EU Council Directive and which shall come into force on the 1st January 2019. The new rules will be amending the 14th Schedule to the VAT Act by introducing a new Part 9 to the Schedule.
A voucher is defined as an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services and where the goods or services to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument.
There are two types of vouchers.
Single Purpose Vouchers (SPVs)
SPVs are defined as vouchers where the place of supply of the goods or services to which the voucher relates, and VAT due on those goods or services is known at the time of issue of the voucher. This is in line with the general principle that VAT is chargeable at the moment that the prepayment for a future supply is received and that all relevant information concerning this taxable supply is known. A transfer of a SPV will be treated as a supply of goods or services to which the voucher relates (i.e. it is treated as a supply), and VAT should be accounted for accordingly. An example of a SPV is a Eur50 voucher for fuel in one of the EU MS in a number of listed petrol stations.
Multiple Purpose Vouchers (MPVs)
A MPV is any voucher which is not a SPV. The real nature of the transaction, the place of supply and the amount of VAT due is not known in the case of a MPV. Therefore, the transfer of such voucher will not be considered as a taxable event until the actual goods or services are identified and handed over in return for the acceptance of the voucher. The chargeable event will be the redemption of the MPV.
Thus, MPVs will only be subject to VAT when the voucher is redeemed i.e., no VAT will be due when the voucher is transferred through the supply chain. The value on which VAT should be accounted for is either the price paid by the consumer, or if that is not known, the face value of the voucher, less the amount of VAT relating to the goods or services supplied. An example of a MPV is a hotel voucher valid in different countries which can be subject to different vat rates.
How can we help?
ACT offers highly specialized vat advice on anything that is related to your business. Please contact us to discuss how we may help you and your business understand the vat treatment of vouchers and how this may effect your business. For further information, you may contact the firm’s tax and corporate services partner Stephen Balzan on firstname.lastname@example.org
Apart from its offices in St. Julian’s Malta, ACT operates from a second office in Gozo, which is situated in the capital city of Victoria. For an appointment in our Gozo office, please call on 00356 21378672 or send us an email on email@example.com.
This article contains general information only and is not intended to address the circumstances of any particular individual or entity. ACT, by means of this article is not rendering any accounting, business, financial, investment, legal, tax, or other professional advice or service. This article is not a substitute for such professional advice, nor should it be used as a basis for any decision or action that may affect your finances or your business. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Before making any decisions or before taking any action that may affect your finances or your business, you should consult a qualified professional adviser. ACT shall not be responsible for any loss whatsoever sustained by any person who relies on this article.
8th December 2017
Maltese companies are subject to tax at the rate of 35% on their world wide income and capital gains. Malta grants various fiscal incentives to both companies and their shareholders upon distribution of a dividend. Malta is a membe...Learn More
Setting up a Company
Setting up a company in Malta is a relatively straight forward procedure and can be set up within 2 working days, provided we are in receipt of all the information, funds and due diligence documentation we need. The Act that regulates Malte...Learn More
Taking up Residence
Warm climate, friendly people, excellent communication infrastructures, low criminality and many other features of the Maltese islands have made Malta an excellent destination for people to take up residence in. Moreover low rates of taxati...Learn More
In the last few years, a large number of remote gaming operators have established themselves in Malta and the Malta Gaming Authority has to date issued over 400 licenses. The Gaming Licenses There are four (4) different gaming licenses that a prospective applicant may apply for, being:&nb...Learn More
Malta has become a destination of choice for the setting up of Payment Institutions (also referred to as Payment Services Providers or PSPs). A number of advantages has contributed to this success, mainly but not limited to the fiscal incentives granted not only to the payment institutions ...Learn More
Electronic Money Institutions
Malta has recently seen an increase in the number of Electronic Money Institutions (EMIs) looking to set up their operations in Malta. This has been largely due to the growth in the e-commerce and the i-gaming industries. Such EMIs are regulated by the Financial Institutions Act and t...Learn More
Initial Coin Offering (ICO) Services
Malta has always been on the forefront of technology and innovation. In the past months, a number of initiatives have been launched, aimed at establishing an innovative and attractive regulatory framework for entities operating in blockchain (and distributed ledger technologies), virtual cu...Learn More
Prospects – Services of a Corporate Advisor
‘Prospects’ is a new platform set up by the Malta Stock Exchange in line with its commitment to open up new capital market opportunities, create economies of scale and to afford businesses more competitiveness and sustainability. Through ‘Prospects’, SME’s wil...Learn More
Assistance to Family Businesses
Malta has recently introduced legislation to encourage good governance in the management of family businesses, to assist family businesses to operate their business in an efficient way and to assist such family businesses to transfer their business from one generation to the other. Malta is...Learn More