From 1 January 2019, the 27 member states of the EU adopted harmonised rules on the VAT treatment of single-use and multi-use retail vouchers. These reforms are enacted by the VAT COUNCIL DIRECTIVE amending Directive 2006/112/EC as regards the treatment of vouchers
A voucher is a instrument used as consideration or payment for the supply of goods or services. For VAT purposes, the EU as defined vouchers into two models. Follow all the European Union’s completed and planned reforms via VAT Calc’s EU VAT reform tracker.
1 Single Use Voucher
These are vouchers where the shop or provider where the voucher may be redeemed is set and the goods or services and country of use are known (so VAT rate clear) at the time of buying the voucher. For example, a voucher issued by a single national chain may typically only be used in shops of that chain. So it is defined at the time of buying the voucher who the supplier will be. This is therefore deemed supply. Any VAT due on those underlying goods or services is paid at the point of issue of the voucher and at the point of each transfer of it, where these are done for consideration
2 Multi-purpose voucher
These are vouchers where the goods or services, shop, provider or jurisdiction where the voucher may be redeemed is not set at the time of buying the voucher. Typically, this is a scheme with a number of differing retailers signed-up, and the consumer may redeem the voucher in any one of the stores for products or services that may have different VAT rates. So it is not clear who the supplier will be or what VAT rate at the time of buying the voucher. Any VAT due is only payable when the voucher is redeemed for goods or services. The consideration for that supply will be amount last paid for the voucher or, in the absence of this information, its face value.
The new EU rules cover:
- The rules will exclude discount vouchers, transport tickets, admission tickets and postage stamps.
- the definition of vouchers, including: retailer gift cards; price discount coupons; and pre-paid voice and data telephony cards.
- the different treatments of single and multiple use vouchers, and the place of supply. It seeks to avoid double taxation where vouchers are used across countries with varying VAT rules – termed mismatches.
- how to determine the taxable base of vouchers to calculate the VAT due.
- It does not cover discount vouchers which allow for a price reduction, but carry no right to receive goods or services