On 27 June 2016, the Council of the European Union adopted a directive to amend the European VAT Directive with the aim to achieve a harmonized VAT treatment of vouchers within the EU.
Under current legislation, Member States have developed different VAT treatments of vouchers within the EU because the VAT rules regarding the time of taxation, the place of the supply of goods and services, the taxable amount, the chargeability and the right to deduct VAT are insufficiently clear. The internal market regarding the VAT treatment of vouchers is therefore not functioning properly.
The new voucher directive covers a couple of topics. Firstly, a definition of vouchers is introduced where a distinction is made between two types of vouchers. A single-purpose voucher ("SPV") means a voucher where the place of supply of the goods or services to which the voucher relates, and the VAT due on those goods or services, are known at the time of issue of the voucher. The voucher directive provides that any transfer of a SPV is treated as the underlying supply of goods or services, while the actual supply is not taken into account as an independent transaction for VAT purposes.
The second type of voucher is considered a residual category which can not be regarded as SPV and are so-called multi-purpose vouchers ("MPV"). These vouchers can be used for several goods or services, where the place of supply is yet unknown or for which different VAT rates apply. With respect to MPV's, only the underlying supply is subject to VAT when the MPV is redeemed and not the transaction of the MPV through the supply chain. The voucher directive also stipulates that if a MPV transaction is made by a another taxable person then the one carrying out the transaction, any supply of services that can be identified such as distribution or promotion services, shall be VAT taxable. Finally, there is a separate provision for determining the taxable amount of MPV's. The taxable amount of the MPV will be equal to the consideration paid for the MPV, or the monetary value indicated on the voucher in case information concerning the consideration is missing. It is notable that the taxable amount of a MPV is equal to the consideration paid, while the taxable amount of a SPV is determined by the basic rule, being the consideration actually received for the voucher. A voucher that only entitles the holder to a discount are explicitly not covered by the voucher directive.
The EU VAT Directive change will be effective as of 1 January 2019 and should be transposed into national legislation no later.
We believe that the amendment of the VAT directive still contains uncertainties regarding the VAT treatment of vouchers because the included provisions are open to different interpretations and certain topics are excluded from the scope of the directive.