As of 1 January 2019, the VAT rules relating to vouchers will change. As a result, an amendment to the rules governing the levying of VAT on loyalty schemes has also recently been published.
Voucher
A voucher is a gift voucher; a voucher that entitles you to something. They are often used as gifts. Examples include cinema vouchers, book vouchers and dining vouchers. These days, they often take the form of a card or other digital format. The way it works is that someone approaches the issuer or retailer of the voucher, pays a sum of money there and receives the voucher in return. This person then gives the voucher to someone else as a gift. That person then uses the voucher to purchase a good or service.
The question is when VAT must be paid. This may be at the time the voucher is redeemed for the goods or services purchased with it. However, it may also constitute an advance payment for that good or service, in which case VAT must be paid at the time the voucher is sold.
From 1 January 2019, a distinction will be made between:
- single-purpose vouchers (singular (vouchers): where, at the time of sale of the voucher, it is clear what type of goods or services will be purchased with it;
- multi-purpose vouchers (multiple (vouchers): where the voucher can be used to purchase various types of goods or services.
For VAT purposes, a single-purpose voucher is treated as an advance payment. VAT is therefore payable at the time the voucher is sold. When the voucher is redeemed, no VAT is payable, of course.
In the case of a multi-purpose voucher, VAT is payable at the time the voucher is used to purchase goods or services. Where the voucher is used to purchase both goods and services subject to the reduced VAT rate (6%, from 1 January 2019: 9%) and goods and services subject to the standard rate (21%), the voucher is considered a multi-purpose voucher.
Savings schemes
In loyalty schemes, businesses issue vouchers (or loyalty stamps), which can be redeemed at a later date for goods or services. The vouchers may be provided free of charge (for example, a free stamp for every €10 spent on groceries), or they may be provided in return for a fee.
For VAT purposes, with effect from 1 January 2019, a distinction is made between:
- vouchers that can be redeemed without any additional payment: the rules for vouchers described above apply to these;
- Vouchers that can only be redeemed by making an additional payment: in such cases, VAT is payable at the time the vouchers are redeemed. VAT is calculated on the consideration. The consideration consists of the sum of the amount paid when the voucher was purchased and the additional payment.
You can find the new rules in Article 21 of the 1968 Turnover Tax Implementation Decree.
Action
Businesses that operate with vouchers and/or issue or receive gift vouchers or coupons would be well advised to check – or have someone check – whether the VAT implications of this will change with effect from 1 January 2019.