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Treatment of vouchers in VAT as of 1 January 2019

The upper and lower houses of the German parliament decided in November to implement the Europe-wide voucher regulation in German law with effect as of 1 January 2019. This is intended to ensure that vouchers traded within the EU are treated uniformly in terms of taxation.

Vouchers are an attractive marketing medium that offer corporations advantages in terms of liquidity and customer loyalty: Corporations can use vouchers to receive payment for future services although the actual service is often either used later or even not at all. The implementation of the EU Voucher Regulation will mean that the VAT treatment of vouchers will be fixed in law for the first time.

A voucher is accordingly defined as an instrument that can be exchanged (in full or in part) in return for goods or services. In principle, this covers any type of voucher (e.g. Paper vouchers, plastic cards, electronic vouchers, etc.). The means of payment does not have to be explicitly described as a “voucher”. This means that even money cards or prepaid cards that are charged with a certain sum of money and handed out to customers for nothing in return are counted as vouchers in terms of VAT.

As of this year, a difference will no longer be drawn between goods and value vouchers for the VAT treatment of vouchers. The only question will be whether a voucher can only be redeemed for one particular purpose ( single-purpose voucher ) or whether a voucher can also be used for several purposes ( multi-purpose voucher ).

Vouchers for which at the time of issuance all information (type and volume of goods/services including the relevant VAT rate) is available for the reliable determination of the VAT, in future count as single-purpose vouchers. For single-purpose vouchers the service is already performed in terms of VAT with the issuance of the voucher.

If, by contrast, it is unclear for what the voucher will be redeemed, it is a multi-purpose voucher. This is for example the case if the vouchers issued can be used for the existing product range and this includes both products subject to the reduced VAT rate as well as products subject to the regular VAT rate. For multi-purpose vouchers, the issuing company only has to pay the VAT when the redemption actually takes place because service is not yet fixed when the voucher is issued.

Conclusion: Affected companies and retailers have set up organizational measures to ensure that single-purpose and multi-purpose vouchers are recorded separately in their cash register or merchandise management systems as of 1 January 2019.

Dr. Herbert Buschkühle is an attorney-at-law/tax advisor/notary public/ specialist attorney for tax law/ specialist attorney for inheritance law at PKF WMS Dr. Buschkühle PartG mbB Rechtsanwälte Steuerberater, a co-operation partner of PKF WMS Bruns-Coppenrath & Partner mbB Wirtschaftsprüfungsgesellschaft Steuerberater Rechtsanwälte (member company of the PKF network).

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