On 27 June 2016, the Council of the EU announced that it has adopted a Directive 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.
Special Purpose Vouchers
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
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.
Unredeemed multi-purpose vouchers
The Voucher Directive does not cover situations where a MPV is not redeemed by the final consumer during its validity period, and the consideration received for such voucher is kept by the seller.
Transitional rules
There are no transitional rules in the Directive and therefore it is silent on the treatment of vouchers issued before 31st December 2018 but redeemed after 1 January 2019. Therefore it is up to each and every Member State to deal with these cases and implement transitional measures.
Transposition into national legislation
Member States will 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.
