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Discount vouchers do not escape EU VAT

  • Nov 11, 2013 | Richard Asquith

Discount vouchers do not escape EU VAT

The EU has confirmed that paid-for discount vouchers on goods and services are not exempt from VAT.

Discount Vouchers not a financial service for VAT

Money-off discount vouchers provided for free have not price, and therefore no VAT due. However, face value discount vouchers have a value, and therefore VAT is potentially due.

A number of providers of discount vouchers and similar incentives had been attempting to present discount vouchers as a financial service, and therefore exempt under the EU VAT Directive. They claimed that under the VAT Directive purchased these resembled back accounts or related financial transactions.

The matter was referred by the Netherlands VAT office to the EU Advocate General at the European Court of Justice. This is the highest court of appeal for matters related to EU law, including VAT.

The AG has said last week that such vouchers cannot be considered as ‘other negotiable instruments’ as per Article 135(1)(d) of the VAT Directive 2006/112/EC even though it is a potentially transferable security.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.