9.6.2 Discount vouchers

When a business accepts vouchers in return for a supply, without receiving any compensation/consideration for accepting the voucher, the business will either grant a discount or rebate (if a payment has to be made by the customer) or it will make a free supply of goods or services.

As mentioned, the VAT treatment of transactions involving these vouchers is not explicitly included in the EU VAT Directive. This means that businesses performing these transactions should rely on the more general relevant provisions in the EU VAT Directive as well as the relevant CJEU case law on discounts as researched in Section 5. In many of the relevant CJEU cases, vouchers or similar instruments were used.1 From these cases, it is clear that issuing discount vouchers is not a supply that is subject to VAT and that redeeming these vouchers decreases the taxable amount for the discounted supply.

Where a discount voucher is issued for consideration, the taxable amount for the supply for which the discount voucher is used is the actual payment received by the supplier, including the consideration received for issuing or accepting the discount voucher.

In Chapter 5, I introduced the solution of ‘joint payment, shared liability’ to solve the VAT issues regarding ‘leap-frog discounts’. In my view, the solution of ‘joint payment, shared deduction’ as introduced in that Section is in line with the purpose of EU VAT, which is the taxation of expenditure for local consumption. Where a transaction takes place for which a money off discount or cash rebate, using a voucher, is granted in a different tax jurisdiction than the country where the business paying (finding) those discounts and rebates is established, the VAT consequences of the funding should be accounted for in the country where the final customer is established.