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Council introduces consolidated rules on taxation of vouchers

As the current provisions of the VAT Directive do not ensure consistency in the tax classification of transactions involving vouchers, causing a divergence of interpretation across the EU, on 27 June 2016 the Council of the European Union adopted an amendment to the existing VAT Directive. Since 2012 the European Commission has attempted to establish new rules for the taxation of vouchers, to address various doubts among taxpayers from different EU countries. Taxpayers did not always know how to settle VAT on vouchers if they were issued in one member state and redeemed in another.

The amended VAT Directive will include new definitions of vouchers: the single-purpose voucher and the multi-purpose voucher. In general, a voucher will be a document that entitles a specific person to make a specific purchase of goods or services. When obtaining a single-purpose voucher, the customer will have to know what purchase he is entitled to make. Any other voucher will be a multi-purpose voucher, e.g. enabling the user to apply a certain amount to any use in a store; then the customer decides what goods or services the voucher will be used for.

Under the new rules, the two types of vouchers will be settled in a different manner from the VAT point of view. A single-purpose voucher will be treated as a prepayment (advance payment) for a particular purchase. So if a voucher is issued for the purchase of specific goods, the transaction will be regarded as a supply of goods and will include VAT at the rate applicable to the goods or services for which the voucher was issued. Subsequent delivery of the goods or services will not require calculation of VAT.

In the case of a multi-purpose voucher, VAT must be settled only at the time of completion of the transaction. VAT will be charged only on the actual delivery of the goods or services covered by the voucher. The earlier transfer of the voucher is not taxable (unlike the case of a single-purpose voucher). So before the customer decides on a specific purchase, there will be no taxable supply of goods or services and no basis for calculating the specific amount of VAT.

These solutions apply only to vouchers entitling the holder to obtain goods or services, not discounts on the purchase of goods or services. The new rules must be applied by the member states from 1 January 2019, relating to vouchers issued after 31 December 2018.

Bartosz Gidziński, junior tax specialist

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