How to treat vouchers and coupons in 2019?

The proposed amendment to the Act on Value Added Tax transposes changes made in Council Directive (EU) 2016/1065 which will take effect in January 2019 and stipulates, among other things, new harmonised rules for the application of value added tax to various types of vouchers. Until now, this matter has never been specifically addressed in the VAT Directive.

The amendment provides a definition of a voucher with the intent of distinguishing a voucher from payment instruments. The basic condition for fulfilling the ‘voucher’ definition is the obligation to accept the voucher as consideration or part of consideration for a supply of goods or provision of a service. As a result, the new rules will not apply to, for example, discount coupons that entitle the holders to obtain a discount from the purchase price but do not provide the right to receive such goods or such service, and therefore are not considered a voucher for VAT purposes.

According to the new regulation, vouchers will be divided into two groups by their properties in the act: single-purpose vouchers and multiple-purpose vouchers.

For single-purpose vouchers, as the name implies, the purpose of supply is sufficiently clear already at the time of their purchase. For this type of vouchers, taxable supplies take place already at the moment of their transfer. It means that if a taxable person transfers a single-purpose voucher in his/her own name, he/she will apply value added tax to such a transfer in an identical manner as if he/she supplied the goods or provided the service to which the voucher relates himself/herself. This obligation relates both to the issuer of the single-purpose voucher (person that issues the voucher, i.e. delivers it to the first recipient), and to the subsequent distributors.

Upon the use of the voucher, the VAT regime will depend on whether the actual provider of the goods or service is the same person that issued the voucher. If it is the same person, the use of a single-purpose voucher will no longer be subject to VAT.
A different situation will be if the ultimate provider of the goods or service is different from the issuer of the voucher. In these cases, a legal fiction is introduced stipulating that the delivery of the goods or provision of a service in exchange for the voucher is in VAT terms considered a provision of supply to the issuer of the voucher.

In respect of multiple-purpose vouchers, the purpose of supply cannot be clearly determined at their acquisition. It may be a voucher for the purchase of services or goods. Or a voucher for the goods or services subject to various tax rates. The taxation of a multiple-purpose voucher is therefore postponed to the moment of its use, i.e. to the date of the actual supply of the goods or provision of a service. Unlike the rules that apply to single-purpose vouchers, its transfers are not treated as a rendered supply.

In practice, there are various situations for the use of vouchers for the supply of the goods or provision of services. We recommend reviewing whether the regime adopted by you is aligned with the upcoming changes.