6.2.1 Free transactions and non-economic activities

In Chapters 3 and 4, I have established the criteria for determining whether a supply, or an element included in a multiple-element transaction, is made for consideration. In this Chapter, I will examine the VAT consequences of supplies (or parts of supplies) that are not made for consideration.

As discussed in Chapter 3, economic activities that are performed for consideration (i.e. supplies of goods and the provision of services are subject to VAT if all relevant requirements are met. It is also possible that a taxable person, acting as such, performs these economic activities for no consideration. In this Chapter, I will examine the VAT consequences of those (economic) activities. In Chapter 3.9, I grouped these transaction in the top-left quadrant of the below matrix. I will also briefly touch upon the VAT consequences of non-economic activities, but because this research focuses on the VAT treatment of promotional activities, and more specifically activities involving vouchers, and those activities are, in my view, always economic activities, I focus on the economic activities performed for free.