Yesterday the Council of the EU announced after years of negotiations the adoption of a Directive regarding the VAT treatment of vouchers. Vouchers are used increasingly and come in many forms. They include for instance pre-paid telecom cards, gift cards and price discount coupons for the purchase of goods or services.

Currently no specific rules exist at EU level on the treatment of vouchers. The new rules in the Directive define two types of vouchers, i.e. single purpose vouchers and multi purpose vouchers.

Single purpose voucher

In the event of a single purpose voucher the supply of goods and/or services to which the voucher relates is known, so one can easily identify the VAT treatment of the underlying transaction. The subsequent transfer of the voucher by a taxable person acting in its own name is thus assimilated with the underlying taxable supply of goods or services. 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.

Multi purpose voucher

By contrast, the real nature of the transaction, neither the place of supply nor the amount of VAT due is yet known in case of a multi purpose voucher. 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 here be the redemption of the multi purpose voucher. The taxable amount will be equal to the consideration paid for the multi purpose voucher, or in case of lack of information concerning such consideration, the monetary value indicated on the voucher.

EU Member States will have until 31 December 2018 to transpose the directive into national laws and regulations. Provisions will only apply to vouchers issued after that date.