Einde inhoudsopgave
The EU VAT Treatment of Vouchers (FM nr. 157) 2019/5.1
5.1 Introduction
Dr. J.B.O. Bijl, datum 01-05-2019
- Datum
01-05-2019
- Auteur
Dr. J.B.O. Bijl
- JCDI
JCDI:ADS599438:1
- Vakgebied(en)
Omzetbelasting / Levering van goederen en diensten
Omzetbelasting / Bijzondere OB-regelingen
Omzetbelasting / Vergoeding
Voetnoten
Voetnoten
Oxford Dictionaries online, © 2017 Oxford University Press, to be accessed online at https://en.oxforddictionaries.com/definition/discount (last accessed on 24 February 2019).
Oxford Dictionaries online, © 2017 Oxford University Press, to be accessed online at https://en.oxforddictionaries.com/definition/rebate (last accessed on 7 November 2017).
Oxford Dictionaries online, © 2017 Oxford University Press, to be accessed online at https://en.oxforddictionaries.com/definition/cashback (last accessed on 7 November 2017).
I found many of these reasons online in a small article by Michelle Rubio on http://smallbusinessesdoitbetter.com. The following link allows access to the article (last accessed on 7 November 2017): http://smallbusinessesdoitbetter.com/2013/02/5-reasons-why-you-should-offer-discounts/
Increased traffic means more people will come into a shop or visit an online shop if discounts are offered. More traffic means more potential buyers.
Not limited to the discounted products – often, customers that are in a store or visit a web shop also spend money on other items besides (or instead of) the discounted offers. A volume discount is a specific type of discount aimed at increasing sales volumes.
Influencing customer behaviour can increase sales of specific items, helping businesses or sales people to meet their sales targets.
Giving your customers a better price for a quality products can greatly improve their loyalty to a business, especially first time buyers.
Discounting items allows businesses to dispose of old inventory and even items that they don’t plan on selling anymore.
These are called ‘prompt payment discounts’, ‘early payment discounts’ or ‘cash discounts’.
Preferred payment method discounts are offer to customers, e.g. to avoid paying fees on credit card transactions.
In this chapter I will discuss the effect of discounts and rebates on the VAT position of the supplier and, where relevant, the purchaser of goods or services. As mentioned in Chapter 1, discounts are part of the promotional mix, making purchases more attractive to customers.
In the dictionary, a discount is described as a ‘deduction from the usual cost of something’1 and a rebate is described as ‘a partial refund to someone who has paid too much for tax, rent, or a utility’.2 Specific forms of rebates are cash-backs, described as ‘a form of incentive offered to buyers of certain products whereby they receive a cash refund after making their purchase’.3 This means that both concepts lead to a price decrease, where a discount is deducted from the actual payment or consideration for the supply and a rebate is granted in the form of a refund of part of the consideration that was originally paid. The cash back is a specific species of rebate.
I have listed a number of reasons (non-exhaustive) for businesses to offer discounts and rebates:4
Increase traffic,5
Increase sales,6
Meet sales targets,7
Create stronger client relationships,8
Monetise inventory,9
Promote prompt payment,10 and
Promote certain payment methods.11
The VAT treatment of discounts or rebates should not be affected by the use of vouchers for obtaining these discounts or rebates. Specific types or discounts and rebates, leapfrogging over one or more parties in a transaction chain, require specific attention and they are researched in-depth in this Section. These ‘cash backs’ and ‘money off’ schemes usually require the use of vouchers, issued by the party in the chain granting the ‘cash back’ or ‘money off’ to a customer at the end of the production and distribution chain. Effectively, these ‘discounts’ should be treated as third-party payments with a right to deduct the VAT included in that payment. I will provide the scientific basis for that view in this Section.