Executive proposes to harmonise VAT rules on vouchers
By Tanguy Verhoosel | Thursday 10 May 2012
The European Commission proposed, on 10 May, to add new provisions to VAT rules in order to harmonise the tax treatment of vouchers – prepaid phone cards, gift certificates, discount coupons, etc. It intends to eliminate cases of double taxation as well as double non-taxation that result from different national rules.
The vouchers market is worth more than €52 billion a year in the EU, with prepaid telecommunications accounting for 70%.
The absence of common rules, notes the Commission, creates problems for companies and VAT administrations alike. When a voucher is issued in one member state and used in another it is not easy to determine the point at which it has to be taxed. International hotels that issue vouchers in different countries for promotional purposes, for example, are confronted with this problem.
The Commission is therefore proposing to harmonise the definition of vouchers for VAT purposes and the point at which VAT is due on vouchers, ie at point of sale or redemption.
The new rules already make a clear distinction between prepaid telecoms credits, which are vouchers, and mobile payment services, which are taxed differently.
The executive’s proposal also sets common rules for the distribution of vouchers in distribution chains. A telephone card, for example, can change hands several times before being sold to the end consumer. Companies that form part of the chain must have certainty about their tax obligations.
Other technical measures, concerning for instance entitlement to deduction and redemption procedures, are also proposed.