9.8.1 The difference between vouchers and money and payment vehicles

In my view, vouchers are not (a form of) money, securities for money, credit cards, debit cards or charge cards or any other payment vehicle. Vouchers are never the ‘purpose’ of a supply. Vouchers are either a step between a payment and the supply for that payment (in case the supplier of the underlying goods or services is compensated for accepting vouchers) or they give right to goods or services or a discount on the supply of goods or services. Vouchers are always linked to an underlying supply – they are proof of the entitlement to the underlying transaction or discount for the holder of the voucher, and their value is determined entirely by the value of the underlying transaction. The possibility to use vouchers is limited to participating businesses, because voucher schemes are based on legal agreements. Even though vouchers can be used for money laundering because a monetary value can be ‘stored’ on vouchers,1 they are not money or a payment vehicle.

Money and other payment vehicles, on the other hand, are not linked to specific underlying transactions. Money has its own intrinsic value. Money is legal tender, which is used as the standard form of payment for all transactions. Unlike vouchers, businesses do not enter into specific legal agreements with other businesses/entities/government bodies about whether they accept money, in the sense of their local legal currency, as payment for their supplies. Money is generally accepted as consideration. The value of money is expressed in a national currency, which may (temporarily) restrict the use of money to the jurisdiction(s) that use that currency, but by exchanging money from one currency to another the spending possibilities of money are virtually boundless.

Payment vehicles, such as credit cards, debit cards and cheques, represent money or facilitate the transfer of money. They are ‘connected to’ or ‘aimed at’ the money itself, not to the supply of goods or services that the money pays for. Even though money is, in essence, also an ‘in between step’ between transactions, money has completely different purposes than vouchers. The use of money is not based on a business agreement. Money is not used as a promotional scheme, or at least not in the same sense as vouchers are. Credit cards, for example, are based on a completely different business model and have a different function from vouchers: for credit card companies, granting credit for purchases and facilitating payments for the underlying transactions are their main services, for which they receive consideration (e.g. interest or a payment per transaction).

In its note to the original proposal, the Council of the European Union gives as an example of an instrument that could be a voucher or a payment method a payment method for a nominated place, e.g. a shopping centre, where the instrument sold utilises an existing payment service provider such as MasterCard or Visa and uses existing platforms to allow customers to redeem the instrument.2 In my view, this could be a payment instrument if the main purpose of the business operating it is granting credit for consideration (i.e. interest) and/or facilitating payment for consideration, because then the instrument is similar to a credit card. If, on the other hand, the main purpose of the scheme is to facilitate sales and increase revenue at the ‘certain location’, e.g. for vendors in a sports stadium, and the business operating the scheme, e.g. Visa, would agree to issue card granting a specific amount of credit that can only be spent on the goods and services provided in that location, then the service by Visa may either have to be split into two (or more) components, one of which is the exempt granting of credit for which the interest is the consideration, and the other being business promotion on behalf of the businesses at the specific location, provided that the businesses (agree to) pay Visa a specific consideration for these activities. If the activities cannot be split, e.g. because they form objectively, from an economic point of view, a whole transaction, which it would be artificial to split, all those elements or acts constitute a single supply for purposes of the application of VAT.3 If it is not possible to regard the elements of which that service consists as constituting a principal service on the one hand and an ancillary service on the other, because those elements must be placed on the same footing, then the exemption cannot apply.4

Normally, the purpose of a transaction should not be considered relevant for determining the VAT consequences of that transaction.5 However, what I mean by this is that voucher transactions are not transactions that are typically performed by businesses that operate in the financial sector, but rather by businesses from the retail and consumer products sectors, that operate voucher schemes as a promotional activity. This means that the nature of voucher schemes is performing promotional activities, where the vouchers are a means of enabling these businesses to run such schemes. Voucher transactions are not specific to, and essential for, the exempt transactions as included in Article 135 of the EU VAT Directive.6