The EU VAT Treatment of Vouchers (FM nr. 157) 2019/6.3.3:6.3.3 VAT due on transactions that are deemed to be made for consideration

The EU VAT Treatment of Vouchers (FM nr. 157) 2019/6.3.3

6.3.3 VAT due on transactions that are deemed to be made for consideration

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In this Section, I will examine the EU VAT rules dictating the treatment of transactions that are deemed to be made for consideration. Taxing these transactions ensures that goods and services that are performed for no consideration, for example as promotional activities, do not result in untaxed consumption. At the same time, the EU VAT rules should ensure that for businesses that perform these promotional activities, VAT on the costs incurred for performing these activities is deductible as VAT on business costs.

I will first focus on the rules and case law regarding the application and use for private use of business assets that are capital goods,1 because the VAT rules regarding the application and use for free for consumptive use of capital goods has been the topic of many CJEU cases, as opposed to the application and use of non-capital assets or of services. Subsequently, I will answer the question whether, in the current EU VAT system, these rules should also apply to non-capital goods and to services (Sections 6.3.3.5 and 6.3.3.6). I will comment on these rules and give my view on how these transactions should be treated from a VAT perspective, using the purpose of EU VAT and the commercial and economic reality of these transactions as a reference.

6.3.3.1 Taxation of the application and the use of capital assets6.3.3.2 For the private use of the taxable person or of his staff or, more generally, for purposes other than those of the business of the taxable person6.3.3.3 Disposal free of charge (of goods, not services)6.3.3.4 Taxation of the application and the use of capital assets (continued)6.3.3.5 Do the ‘private use allows full VAT deduction and subsequent taxation of that private use’-provisions also apply to non-capital goods?6.3.3.6 Taxation of the ‘private use’ of services.6.3.3.7 Do the ‘private use’ provisions also apply to bought-in (purchased) services?6.3.3.8 The recipient’s VAT status and his use of the free supply

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