Dutch government released proposal to implement voucher directive
On July 7, 2017 the Dutch government released the legislative proposal to implement the EU VAT Directive regarding the VAT treatment of vouchers into the Dutch VAT Act. In this Indirect Tax Alert we provide you with an analysis of this proposal.
12 july 2017
On June 27, 2016 the European Council adopted a proposal for a VAT Directive regarding the VAT treatment of vouchers. Recently the Dutch government released the legislative proposal to implement this VAT Directive into the Dutch VAT Act. Logically, the proposal of the Dutch government adopts the rules provided in the EU voucher directive. However the explanatory notes on the proposal provide some interesting insights in the Dutch government’s view on the voucher directive.
Definition of vouchers
A definition of a voucher is important to establish whether the new rules will apply. A voucher is defined as an instrument where there is an obligation to accept it as a consideration or a partial consideration for a supply of goods or services. In addition, the goods or services to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument. The voucher directive does not target discount vouchers. Neither should it trigger any change in the VAT treatment of transport tickets, admission tickets to cinemas and museums, postage stamps or similar.
The voucher directive distinguishes between Single-purpose vouchers and Multi-purpose vouchers.
Single-purpose vouchers (SVP)
An SPV is a voucher carrying a right to receive a supply of goods or services where the place of supply and the applicable VAT due for these goods or services is known at the time of issue of the voucher. One of the provisions in the voucher directive states that the transfer of an SPV is always taxed as if it was the supply of the goods or services themselves, unless the taxable person is not acting in its own name. In that case VAT is due according to the standard VAT rules.
Multi-purpose vouchers (MVP)
As regards MPVs - vouchers that are not SPVs - the directive clarifies that VAT should be charged when the goods or services to which the voucher relates, are actually supplied. Any prior transfer of MPVs should not be subject to VAT. Distribution or promotion services in relation to MPVs will be subject to VAT. To ensure that the amount of VAT paid regarding the underlying supply of goods or services (upon redemption) is accurate, the supplier of the goods or services should account for the VAT based on the consideration paid for the MPV. In the absence of such information, the taxable amount should be equal to the monetary value indicated on the MPV itself or in the related documentation, less the amount of VAT relating to the goods or services supplied. Where an MPV is used partially in respect of the supply of goods or services, the taxable amount should be equal to the corresponding part of the consideration or the monetary value, less the amount of VAT relating to the goods or services supplied.
Position of the Dutch government
As mentioned, the explanatory notes on the Dutch legislative proposal to implement the voucher directive in the Dutch VAT Act provide some interesting insights in the Dutch government’s view on the voucher directive.
In particular the explanatory notes provide some additional insight on how to distinguish between vouchers and payment instruments. According to the Dutch government an instrument qualifies as a voucher when it can be used for a limited number of specified goods or services or if the identity of the potential suppliers is known in advance, i.e. a voucher that can be used to purchase products at a given shopping mall at any retailer established there qualifies as a voucher and not as a payment instrument.
The Dutch government also states that the VAT position of the sale of admission and transport tickets will not change. These sales will be considered (pre)payments for the service supplied later. These sales are subject to VAT at the moment of purchase of the ticket.
According to the Dutch government a voucher can qualify as an SPV when a voucher can be used for two different types of services (e.g. for a cinema and an amusement park located in the Netherlands). This is true as long as those two types of services are subject to VAT in the Netherlands at the same VAT rate.
What’s more, the Dutch government also adds to the provision of the taxable amount for MPV’s that if the price that the customer paid and the monetary value of the voucher are unknown for the supplier the taxable amount must be established based on the regular rules for establishing the taxable amount.
The Dutch government makes clear as well that changes have to be made to the current legislation covering vouchers. The VAT rules for coupons, (gift)vouchers and telephone cards need to be amended. The effect of the new rules on the VAT treatment of telephone cards and telephone subscriptions is limited because the (old) proposal for the voucher directive was already taken into account when drafting these rules.
What can you do?
Although the new rules for vouchers will be applicable as of 1 January 2019 it is already important to establish what the impact of the new rules will be on your business. One by one Member States will have to implement these new rules and will make their position known. Different interpretation of the new rules may (still) lead to differences between Member States as regards the application of the new rules.
If you have any questions about the above, please contact your VAT advisor.