Vouchers are pretty widely spread, but in VAT terms, they are barely regulated. The regulations are based on EU jurisdiction. But as from 1st January 2019, the Ministry of Finance plans to bring into force proper regulations in the Tax Code covering the EU Directive on the VAT treatment of vouchers[1]. A draft was published at the end of August.

The definition of vouchers is wide – it includes travel tickets, entrance tickets, postal stamps, meal, gift or holiday vouchers granted by the employer, as well as phone cards and vouchers for charging phone cards.

Definitions

The new regulations bring the following definitions:

  • A ‘voucher’ is an instrument which must be accepted as a full or partial consideration  for a supply of goods or services, whereas the goods or services to be supplied or the identity of their potential supplier, are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument;
  • ‘Single-Purpose Voucher’ means a voucher for the supply of goods or services, whereas the place of the supply or service and the VAT due for them are known at the time the voucher is issued;
  • ‘Multi-Purpose Voucher’ is any other voucher than a Single-Purpose Voucher.

In comparison to the existing definitions, the new term-related provisions cover more options. Yet, for certain vouchers (eg. meal vouchers) there are still certain clarifications needed concerning the classification.

VAT Treatment 

In compliance with the regulations of the directive, the changes include:  

  1. Each transfer of a Single-Purpose Voucher made by a taxable person in its own name is deemed to be a supply of goods/services to which the voucher refers.
  2. The actual handing over of goods or the actual provision of services is not considered to be an independent transaction for the part of the revenue covered by the Single-Purpose Voucher. For the part of the revenue not covered, a separate transaction is considered to take place.   
  3. The transfer of a Single-Purpose Voucher made by a taxable person in the name of another taxable person is considered to be a supply of goods or services made by the other taxable person in whose name the transferor acts.
  4. If the supplier of goods/services is not the taxable person who issued the Single-Purpose Voucher, that supplier shall however be deemed to have made the supply of the goods or services related to that voucher to the issuing taxable person.
  5. The actual handing over of goods or the actual provision of services in return for a Multi-Purpose Voucher accepted as full or partial consideration thereof by the supplier is subject to VAT; whereas each preceding transfer of that Multi-Purpose-Voucher is not subject to VAT.
  6. If a Multi-Purpose Voucher is transferred by a taxable person other than the taxable person carrying out the supply, any supply of services that can be identified, such as distribution or promotion services, are subject to VAT.

These regulations have a general, technic formulation and rare pretty similar to the text of the directive. National specificities and clarifications are not included. This is already giving rise to questions before the draft is approved.

Issues

The new regulations are significant for every person that issues, intermediates or accepts vouchers – such as supermarkets, chain stores, employers, telecommunications, transport, culture-related companies, etc. The draft regulations are unclear as to the practical effects, among other things. Clarifications are still needed, for example, for meal vouchers and similar, whose classification as Single-Purpose Vouchers or Multi-Purpose Vouchers is unclear.       

According to the Directive the application field of special regulations should not include travel tickets, entrance tickets or postal stamps, such aspect not being clarified in the national draft. It must be also clarified to what extent vouchers that offer only a discount for the supply of goods or services can be included in the definitions outlined.

The Chamber of tax advisers has already sent the Ministry of Finance some suggestions for changing and completing the draft legislation. We’d suggest that every person concerned, and their tax advisers, should assess the consequences of the new regulations and should participate in the public debate.