9.5.2.6 The VAT treatment of redeeming SPVs that were issued for no consideration

Under Article 30a(1) of the EU VAT Directive, the actual handing over of the goods or the actual provision of the services in return for a single-purpose voucher accepted as consideration or part consideration by the supplier shall not be regarded as an independent transaction.

However, under the rationale that I propose above in Section 9.5.2.5, the actual redemption of a free SPV against goods or services should be covered by Articles 16 and/or 26 of the EU VAT Directive, because this is actually the transaction where goods or services are the application and/or use of goods for private purposes and the supply of services carried out free of charge.

I’ve tried to come up with an example of a free SPV with a fixed monetary value that can be used as partial payment for a supply that costs more than the fixed monetary value, but I couldn’t because in all my examples, it was impossible to determine the cost (price) of the underlying supply at the time of issuing the voucher which means that the voucher actually qualified as an SPV. Let’s, however, consider an example where a free SPV with a face value of 10 is used as part payment for a supply of a good by the issuer of that SPV with a value of 100. For the issuer of the SPV, the economic and commercial reality of this transaction is that he sells a good with an advertised value of 100 for which he effectively receives 90. The taxable amount for this supply should therefore be 90 less the VAT on that supply. This is also in line with the purpose of EU VAT, which is taxing expenditure for private local consumption. In this case, the expenditure for that consumption is 90 and not 100. This implies that issuing free SPVs should not be taxed.