9.7.2 The supply of a voucher should not be considered a supply that is subject to VAT because there is no consumption

VAT is a general tax on consumption,1 and the supply of a voucher for consideration is not a transaction that embodies consumption. Rather, it is a ‘step towards consumption’ or ‘a narrowing of the spending possibilities of the holder of the voucher’. From a VAT perspective, a complete taxable transaction has taken place only when the voucher is redeemed for actual goods or services.2,3 This is also the view of the CJEU, as I will show below. In other words, from a ‘consumption’ perspective, the supply of a voucher is only part of a (chain of) transaction(s) that lead(s) to a supply of the goods or services that can be consumed.4

A transaction that does not entail any benefit which would enable anyone to be considered consumer of supply of good or services should not be subject to VAT.5 Some argue that this is not a general principle of law, but that it is based on the legal character of VAT as laid down in the VAT Directive6 and therefore part of the fundamental framework of VAT.7 Be that as it may, I consider it a relevant principle for VAT.8 This is also in line with my ‘purpose of the EU VAT’-test: the purpose of EU VAT is the taxation of expenditure for local private consumption. Payment for the issue or transfer of a voucher may be expenditure, but taxation cannot occur without a taxable event such as the supply of goods or services. At the moment of that supply, the purpose of the VAT is fulfilled, even though the VAT may become chargeable at the time of the payment if it qualifies as prepayment for VAT purposes.

The fact that, for various reasons, transactions are divided into separate elements, separating payment and supply or granting the right to a discount and the supply to which it applies, does not make that the part(s) of the (total) transaction that is (are) not the actual, underlying supply should be subject to VAT, because there is no consumption (yet), and nor is there a transaction that is subject to VAT. The term ‘consumption’ should be interpreted as ‘the supply of goods or services to an identifiable consumer or any benefit capable of being regarded as a cost component of the activity of another person in the commercial chain’.9 The issuing or supply of the voucher is only a part of or a step in that total transaction.

This view is supported by the CJEU in the Argos-case10 where it decided that the taxable amount for a supply (of goods or services) in return for a voucher is the ‘actual money equivalent’ of that voucher, which is the money actually received for (issuing, supplying or accepting) that voucher.11 This can only be the case if a direct link exists between the payment of that money (equivalent) and the underlying supply of goods or services. Under the current EU VAT rules, for a payment to be a consideration for a supply, there has to be a direct link between the supply and the payment.12 Otherwise, two supplies should have been identified: one supply of a voucher for money, the taxable amount being the money received for the voucher, and one supply of goods in return for a voucher, which has to be considered a barter transaction because no money is involved, and for barter transactions, the taxable amount is the cost or purchase price of the supply.

Even though the MacDonald Resorts-case does not explicitly concern vouchers as such but ‘points’ or ‘Points Rights’ that can be purchased and which can be redeemed at a later time,13 which in my view qualify as a species of vouchers but that were not qualified or recognised as such in the relevant case, this case does confirm the above view. In the MacDonald Resorts-case, the CJEU held the following in relation to the relevant transactions: “(…) the customer completes the first transaction not to collect points, but with the intention of temporarily using accommodation (the underlying service, JB) or of obtaining other services which he will choose at a later date. Therefore, the purchase of ‘Points Rights’ is not an aim in itself for the customer. The acquisition of such rights and the conversion of points must thus be regarded as preliminary transactions in order to be able to exercise the right to temporarily use a property, or to stay in a hotel or to use another service. Therefore, it is at the final moment of that conversion that the purchaser of ‘Points Rights’ receives the consideration for his initial payment.”14

This means that the issuing or supply of a voucher is only a step towards consumption, or an element of a transaction that still has to be completed. No supply that can be consumed has taken place (yet) at the time of the issuing or supply of the voucher.

Even though issuing a voucher should not be considered a taxable transaction, it should in my view be considered an economic activity within the scope of VAT.15 After all, it cannot be denied that issuing vouchers is a business activity, albeit that the payment should be attributed to the subsequent or underlying transaction, which means that, from a VAT perspective, issuing vouchers is not a supply for consideration.16 It is possible that this is (one of) the reason(s) that the European legislator decided to consider the supply of a voucher and the subsequent redemption of the voucher (for goods and/or services) as one single transaction in its original proposal for the VAT treatment of voucher transactions.

The fact that issuing and supplying vouchers is an economic activity (albeit not always one that is subject to VAT) means that any VAT incurred on costs related to the issuing or supplying vouchers, also when they are not SPVs, should be deductible. Where the supply or issuing of the voucher is not subject to VAT, the costs related to these activities should be considered ‘general costs’ or ‘overhead costs’ of the business. The VAT on these costs can be deducted according to a business’ pro-rata, where applicable, because from a VAT perspective, costs cannot be directly attributed to activities that are not taxable activities. These costs can, however, be attributed to the overall economic activities of the taxable person.17 Under the view of the Commission in their original proposal, where the issuing of the voucher and the subsequent supply of goods and services is considered one single taxable transaction, VAT on the costs related to the issuing of the voucher can be directly attributed to the ‘entire transaction’ including the subsequent supply. This means that deduction depends on the nature of the subsequent supply.