VAT liability for vouchers

Single-purpose or multi-purpose voucher

For VAT treatment, it is particularly relevant whether the delivery or other service described by the voucher is already clearly specified when the voucher is purchased. If the supply or other service and the supplier are already known when the voucher is issued, it is referred to as a single-purpose voucher. Due to the specification, the assessment basis and VAT rate are already determined at the time of issue, meaning that the sale of the voucher is treated as a taxable cash transaction. An example would be a voucher from a theater for attending a theater performance.

In the case of multi-purpose vouchers, on the other hand, the place of performance for VAT purposes or the assessment basis, including the associated tax rate, is unclear when the voucher is purchased. In the case of this type of voucher, a (further) sale is not subject to VAT. They do not have to be recorded as taxable sales in the cash register. Instead, a cash transaction subject to VAT is only to be recorded when the voucher is redeemed (at which point the above criteria are met). An example of this would be a voucher from a supermarket chain in the amount of € 100.

Discount vouchers are separate from these two categories. With these, a certain discount is agreed, which results in a price reduction when the voucher is redeemed, i.e. usually upon delivery or provision of another service. This leads to a reduced consideration and therefore to a reduction in the VAT assessment basis.

Verena Ziegler and Birgit Böhm, tax experts at Forvis Mazars, explain:

“Caution is advised for entrepreneurs:inside when issuing vouchers - they need to check in detail whether a VAT liability is already triggered when vouchers are issued. Nevertheless, our practical experience shows that vouchers, which are multi-purpose vouchers, are more likely to be issued. The aim of the companies is to increase flexibility when redeeming the vouchers by making them less specific. This is usually done by allowing customers to redeem the vouchers in stores in different countries or online, which means that the tax rate is not yet sufficiently specified at the time the voucher is issued.”

Combination with supplies or other services

The VAT treatment of a situation in which a business supply or other service is combined with the issue of a voucher is questionable. The Administrative Court (VwGH) had to decide a case in which a mobile phone company combined its tariffs with the issue of vouchers for the purchase of electronic hardware from selected authorized dealers. In addition to the above comments on single-purpose and multi-purpose vouchers, the VwGH also considered whether the mobile communications company had provided a uniform service.

It denied this and spoke of a contractual link between two independent services. As it was not yet clear at the time the voucher was issued which retailers would supply which items to which customers in return for which voucher, the (proportionate) remuneration for the voucher was not subject to VAT.
 

Conclusion

Vouchers with a function as a means of payment are ultimately only subject to VAT if the entrepreneur providing the service the place of performance (domestic or foreign), the object of the service (delivery or other service) and the tax rate in the sense of an exchange of services for consideration. If one of these criteria is unclear at the time of issue, VAT liability only arises at the time the voucher is actually redeemed.