EU VAT on voucher disagreements

Fri 20th Nov 2015

The resolution of the harmonize treatment of Value Added Tax still alludes the European Union. The latest Latvian presidency failed to bring the member states together on a shared approach to VAT on vouchers.

The principle issue of disagreement remains the definition of a voucher for VAT treatment.

In addition, the member states cannot agree on the right of providers of multi purpose vouchers to deduct their input VAT. Over half the member states believe such vouchers are outside the scope of VAT and should therefore not enjoy the right to deduct VAT on expenses or overheads.

VAT on vouchers

Vouchers for VAT purposes are considered to be means for the future exchange of goods or provision of services as documented on the voucher or supporting documentation. This separates vouchers from money, including private currencies, bitcoins etc.

Single Use Vouchers

Where the exact goods or services are specified on the voucher from a particular retailer, this is termed a single use voucher, and VAT is due at the time of purchase. Where an agent is involved in the sale of such vouchers, it is the principle retailer who is liable to charge and collect the VAT.

Multi Purpose Vouchers

Where the voucher may be redeemed for unspecified goods with one or multiple retailers, this is termed a multi-purpose voucher. Generally, no VAT is due at the time of the sale of the voucher. Partially this is because it is not clear what VAT is due because the voucher could be used for goods or services with differing VAT rates.