Chapter 1 Introduction

Vouchers are used for many different purposes, and vouchers have many shapes and forms. Vouchers can have a ‘face value’ printed on them, allowing the holder of that voucher to use it as consideration (payment) for goods or services to be provided by businesses that have agreed to accept these vouchers. Vouchers can also allow the holder a certain discount to a (future) purchase, or a refund of part of the purchase price of a product. Vouchers can be issued when purchasing goods or services, for no additional charge. Vouchers can be sold. Voucher can be printed in newspapers or on-line. Some vouchers are sold by one business and will allow the holder a discount at a different business. Outside the ‘realms of business promotion’, vouchers are also used as, for example, school vouchers, travel vouchers and meal vouchers. What all of these vouchers have in common is that they represent the entitlement of the holder to something.

From a VAT perspective, taxing ‘the entitlement to something’ has proven difficult. For example, because different EU Member States applied a different VAT treatment to transactions involving vouchers, the European legislator has worked for more than ten years on a common set of rules regarding the VAT treatment of vouchers. In this research, I have tried to establish how voucher transactions should be treated from a VAT perspective, using (amongst other things) the ‘economic and commercial reality’ of these transactions as a test to see how the current treatment, based on existing legislation and case law, compares to what in my view is the desired or appropriate VAT treatment of such transactions.

In this research, I argue and substantiate why transactions involving vouchers do not need a specific VAT treatment. Issuing, selling and redeeming vouchers are, in my view, not transactions that should be, as such, subject to VAT. The vouchers are, as I will advocate, only a form of practical means that enable certain transactions to be performed. In my view, only the transactions for which the vouchers are used are relevant from a VAT perspective. Because there are VAT rules for voucher transactions, I will, however, review and discuss these rules.

Because vouchers are (most) often used for promotional activities, and because promotional activities have a very specific VAT treatment, I will research the VAT treatment of promotional activities in order to establish the desired or appropriate VAT treatment of these transactions where they involve the use of vouchers. Because the range of different types of promotional activities also includes the types of non-promotional transactions for which vouchers are used, this method should cover the relevant types of transactions involving vouchers from a VAT perspective. Therefore, I will research the VAT treatment of promotional activities before I focus on voucher transactions. In the chapter about vouchers, this research of the VAT treatment of promotional activities will culminate in a comprehensive review of the current as well as the desired or appropriate VAT treatment of transactions involving vouchers.