On 27 June 2016, the Council of the European Union published the EU Vouchers Directive (Council Directive 2016/1065) (the “Vouchers Directive”), which amends the Principal VAT Directive (2006/112) in order to introduce a common VAT treatment of ‘vouchers’ across the EU. Broadly, the vouchers covered by this legislation are those provided in return for payment, which can then be used as payment for particular goods or services.
In determining VAT tax points, the Vouchers Directive distinguishes between two types of voucher, being the single-purpose voucher (“SPV”) and the multi-purpose voucher (“MPV”). A voucher is an SPV where, at the time of issue of the voucher, both the place of supply of the goods or services and the VAT due on those goods or services are known. Any other voucher is an MPV.
Under the new regime, VAT will be charged on the sale of an SPV (both the initial sale and any subsequent sales), but will not be charged on the supply of goods and services at redemption. In contrast, VAT will not be charged on a sale of an MPV, but will be charged on the supply of goods or services at redemption.
The deadline for implementation of the Vouchers Directive by EU member states is 1 January 2019. The legislation has not yet been implemented in the UK, although HMRC has recently consulted on implementation and the potential impact this may have on businesses engaged in the buying, selling or redemption of vouchers (see the consultation document here). We expect HMRC’s response to the consultation (which ran from 1 December 2017 to 23 February 2018), and draft implementing legislation, to be published shortly.
If you wish to discuss any aspect of the above, please get in touch with your usual CMS contact or any member of our tax team noted below.