CJ, 25-11-2020, nr. C-637/20

The preamble to legislative acts is often useful in understanding the legislature's reasons for adopting rules contained in the act. Recital 1 of the 2016 Directive explains that the reason why the amendments were proposed was insufficient clarity as to how existing VAT rules should be applied to vouchers. Clarification was, therefore, necessary to ensure consistency in the tax treatment of transactions involving vouchers in different Member States. This is supported by recitals 2 and 3, which indicate that the legislature intended to bring about greater certainty and uniformity in the treatment of vouchers. The opening recitals also express the intention to ensure that the treatment of vouchers is consistent with the principle requiring that a general tax on consumption is exactly proportional to the price of goods and services, and that such clarification should contribute to preventing inconsistencies, the distortion of competition, double or non-taxation and to reducing the risk of tax avoidance.

Nothing suggests, therefore, that the legislature intended to introduce a new, special treatment for vouchers that differs from the general VAT treatment of the supply of goods or services. 23. Its aim was simply to clarify what the existing ‘ordinary’ treatment already demands when applied to vouchers.

Given that the new rules on vouchers therefore do not represent an exception to general EU rules on taxation, I disagree with the Tax Agency and the Italian Government that those rules must be construed narrowly.

In order to clarify the VAT scheme for vouchers, the 2016 Directive introduced Articles 30a, 30b and 73a into the general VAT Directive. The places at which the new provisions were included in the scheme of the general VAT Directive also speak in favour of viewing these amendments merely as a restatement of the law as it already was when applied to vouchers.

Articles 30a and 30b are included in the part of the VAT Directive dealing with ‘Taxable Transactions’, as a new Chapter 5, entitled ‘Provisions common to Chapters 1 and 3’. Article 73a is inserted in the part of that directive dealing with the ‘Taxable Amount’. That provision states that it applies ‘without prejudice to Article 73’. It thus follows the general scheme, but explains it in greater detail with regard to multi-purpose vouchers.

Article 30a(1) of the VAT Directive defines a voucher as an instrument that entails an obligation to accept it as consideration or part consideration for a supply of goods or services and which contains information about the goods or services for which the voucher can be used as consideration, or, alternatively information about the potential suppliers.

It is worth noting that this definition does not include all instruments that are commonly referred to as vouchers. 24. One such instrument is the ‘discount voucher’. It is excluded from the VAT Directive's definition, even if it was envisaged in the original proposal for the 2016 Directive. 25. As stated in recital 4 of the 2016 Directive, the reason for excluding discount vouchers was that such instruments enable the holder only to get a discount on the purchase of the goods or services, but cannot be used in themselves as consideration for the supply of goods or services. In any case, the city card cannot be regarded as a voucher simply because it is commonly referred to as a voucher. In order to be regarded as a voucher, it must satisfy the two conditions required by Article 30a of the VAT Directive.

The two conditions provided for in Article 30a(1) of the VAT Directive are cumulative.

The first condition is that the instrument must encompass an obligation for the suppliers of goods or services to accept it as consideration or part consideration for a supply of goods or services they provide.

In its observations before the Court, DSAB Destination Stockholm insists that the decisive criterion in ascertaining whether an instrument does qualify as a voucher lies precisely in that condition. However, the Italian Government argues that the essential characteristic of a voucher is that it grants the holder the right to obtain goods or services, specified in quantity and quality, from predetermined suppliers.

Although the right to obtain goods or services through use of a voucher is usually part of such instruments, that characteristic was not deemed to be decisive for its definition. In the original proposal, Article 30a provided that ‘‘voucher’ shall mean an instrument carrying a right to receive a supply of goods or services …’. 26. Nevertheless, the final wording of that provision does not mention the right to receive goods or services as a constitutive element of a voucher, but rather focuses on the obligation for the supplier to accept that instrument as consideration. 27. Therefore, the Italian Government's argument that the right to receive goods or services is an essential feature of a voucher cannot be accepted.

The second condition for an instrument to be a voucher is that the goods or services to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation. It is generally acknowledged that such characteristics are what differentiate vouchers from conventional payment instruments. 28.

That condition is worded in the alternative so that, in order for an instrument to be a voucher, it suffices that it is clear for which goods or services it can be used as consideration. If goods and services are not specified, it is sufficient that suppliers of goods or services who are required to accept the voucher as consideration are known.

The definition of voucher in the VAT Directive, therefore, makes the finding that an instrument constitutes a voucher contingent on it satisfying the two conditions set out above. The text, however, does not answer the question whether every instrument that does satisfy these two conditions is necessarily to be treated as a voucher. I will suggest the answer to that question together with an examination of whether city cards satisfy the two conditions laid down by Article 30a(1) of the VAT Directive.

It can, I believe, safely be concluded that the majority of city cards entail an obligation for suppliers participating in the scheme to accept them as consideration. Therefore, they usually satisfy the first condition. In the case of the Stockholm city card, it is apparent from the order for reference that those operators who run museums or other attractions or transport services and who participate in the card scheme are obliged to accept the card in return for the supply of services. That is, however, true only during the period of validity of the card, and within the maximum value limit of the card (which is much higher than the price of the card).

In that respect, it does not seem to me to make any difference whether the supplier has to accept the card as consideration only once, or every time the cardholder wants to use it for the same service. It is important that the city card must be accepted at least once. Therefore, the arrangement under which the supplier may refuse to admit the cardholder more than once (but can volunteer to admit the cardholder more than once), as is the case with the Stockholm city card, does not run counter to the first condition, as the supplier remains under the obligation to accept the card at least once.

The Tax Agency raises two further reasons why the Stockholm city card should not be regarded as a voucher. First, it claims that the card does not disclose in monetary terms the successive decrease of its value, with the result that the cardholder cannot know the value remaining on the card after each use and, second, that the unlimited use of transport services encompassed by that card is a subscription, not a voucher.

A card the value of which diminishes with each use is conceptually similar to a payment instrument. In spite of that, the aim of the 2016 Directive is to make a distinction between vouchers and payment instruments. 31. It is, therefore, not necessary, or indeed even contrary to the aim of that directive, to introduce a condition inspired by features of payment instruments in order to define vouchers. That does not mean that instruments the value of which decreases with each use cannot qualify as vouchers. However, that cannot be regarded as a condition. It is sufficient that, within the upper value limits, the voucher must be accepted as consideration for services included therein. Therefore, the fact that the city card at issue in the main proceedings does not show the cardholder how much credit remains on the card does not preclude it from qualifying as a voucher.

The second objection raised by the Tax Agency is that some aspects of the city card are similar to a subscription, which means that the card cannot be treated as a voucher. In the case of subscriptions (for instance, for a gym, or for the use of transport services for a day, a month or similar timeframes), the transaction is already concluded and the taxable operation is already determined at the moment of the transfer of the subscription fees. That is not the case when it comes to city cards used as vouchers. A city card grants to its holder only the possibility of acquiring a subscription for transport services. Therefore, the taxable operation occurs only when (and if) the card is used for public transport. Additionally, in successive contracts for performance, the performance is not a taxable transaction within the meaning of Article 2 of the VAT Directive. A city card does not alter that. If cardholders avail themselves of the possibility afforded by the city card of acquiring a subscription, the supply of that subscription will be taxed, but the subsequent continued supply of services (each bus ride, for instance) will not.

The fact that a city card enables the cardholder to use it as consideration for a subscription, being a service with its own VAT rules, therefore neither prevents it from being classified as a voucher, nor does it conflict with the tax scheme applicable to subscriptions.

As regards the second condition, set out in Article 30a of the VAT Directive, that the goods or services to be supplied or the identities of their potential suppliers must be known, the order for reference also indicates that the card and related documentation explicitly list participating suppliers as well as the services which can be redeemed.

The Tax Agency nevertheless argues that the city card cannot be classified as a voucher because, owing to its limited period of use, it is impossible for the average consumer to use all the services covered by the card. Yet, there is nothing in the definition of ‘voucher’ that requires that all the relevant services (or goods) have to be redeemed, for an instrument to be considered a voucher. Instruments which allow all listed goods and services to be redeemed (for example, retail outlet vouchers) are indeed vouchers if they are to be accepted as consideration. However, the requirement that all goods and services be redeemed is not a condition which makes an instrument a voucher. 32. Quite the opposite, as explained above: 33. part of the definition of ‘voucher’, stating that it includes the right to the provision of listed goods and services, was not included in the final version of the 2016 Directive. That is an additional argument in favour of the interpretation that the legislature rejected a condition that all services must be exhausted for the instrument to be treated as a voucher. Therefore, the fact that the short duration of city cards usually does not enable cardholders to use all the services listed does not alter the finding that, for VAT purposes, a city card is a voucher.

The difference between the full value of all services included in a card and its nominal value is understandable if the promotional dimension of most vouchers in general, 34. and of city cards in particular, is taken into consideration. 35. The Italian Government expressed concern that the short duration of the validity of the card does not allow the use of all services and might affect its attractiveness for visitors. 36. However, that does not alter the VAT treatment of such cards.

I also feel it necessary, since the point has been raised before the referring court and in various observations submitted by the participants before the Court, to assess the influence of recital 5 of the 2016 Directive on the acceptance of city cards as vouchers. That recital states that ‘the provisions regarding vouchers should not trigger any change in the VAT treatment of transport tickets, admission tickets to cinemas and museums, postage stamps or similar’.

The purpose of that recital is, to my mind, to make it clear that the possibility of acquiring tickets, postage stamps or similar by means of a voucher should not alter the VAT rate applicable to such tickets, some of which are exempted while others benefit from reduced rates. 37. Vouchers only create a possibility to acquire a ticket and create the obligation for the supplier of such a ticket to accept vouchers as consideration. It does not in any way alter the VAT scheme applicable to such tickets. If a ticket is VAT exempt, VAT will not be charged, irrespective of whether the supplier accepted money, other payment instruments or a voucher as consideration.

In my opinion, the only reason why an instrument which satisfies both conditions laid down by the VAT Directive should not be treated as a voucher' is if it prevents the application of the special VAT treatment of a service in respect of which it must be accepted as consideration. As I will show in the last part of my Opinion, if a city card, as a multi-purpose voucher, is subject to the ‘profit margin’ option of taxation, its treatment as a voucher will not alter the specific VAT treatment of services included in such a voucher which benefit from different treatment for VAT purposes.

In the light of all the foregoing, I am of the opinion that a city card, such as that at issue in the main proceedings, satisfies both conditions laid down in Article 30a of the VAT Directive and should, consequently, be construed as a voucher for VAT purposes.

The referring court wishes to know whether, if a city card qualifies as a voucher, it is a single- or multi-purpose voucher.

Article 30a of the VAT Directive makes a distinction between two types of voucher: ‘single-purpose’ and ‘multi-purpose’. A ‘multi-purpose voucher’ is defined negatively as any voucher which does not qualify as a ‘single-purpose voucher’.

By virtue of Article 30a(2) of the VAT Directive, a ‘single-purpose voucher’ is a voucher where the place of supply of the goods or services to which the voucher relates and the VAT due on those goods or services, are known at the time of issue of the voucher. 38. It follows from those indications that those conditions are cumulative and, most importantly, that they mean that at the time of issue of a single-purpose voucher, its VAT treatment must be certain.

In the case of city cards, or at least city cards of the type at issue in the main proceedings, it is clear that, at the time of purchase of the card, the services that will be supplied are unknown. It is, therefore, also unknown at the same moment which VAT rate will apply. Such a city card is, therefore, not a single-purpose voucher. However, as the card is a voucher, it has to be classified as a multi-purpose voucher.

It remains to be explained how transactions operated using the city card are accounted for, and by whom.

The manner in which the VAT is to be applied to multi-purpose vouchers such as city cards is governed by Articles 30b and 73a of the VAT Directive.

It is particularly helpful to run through the concrete application of the VAT rules on vouchers when it comes to city cards. I will, therefore, assess which transactions included in the scheme are taxable and at what moment, as well as the taxable amount, the latter being one of the elements taken into consideration by the Revenue Law Commission in finding that city cards, such as that at issue in the main proceedings, do not fall within the scope of the concept of ‘voucher’.

In accordance with Article 30b(2) of the VAT Directive, VAT is applied to multi-purpose vouchers at the time of the actual supply of the goods or service in question, so that the tax is not charged on transfers of the voucher that take place before it is redeemed. That is so because, at the time of purchase of a city card, not all the relevant information for VAT purposes is known. 39. Given that VAT is a tax on the actual supply of goods and services, in the case of multi-purpose vouchers it is impossible to know which of the goods and services which such a voucher encompasses will actually be supplied.

City cards are usually issued by a taxable person other than the supplier of services for which the card is to be accepted for consideration. As the issuer of the card receives consideration from the cardholder in respect of the transfer of a voucher, the question arises as to whether that transaction should be taxed as a separate service. Otherwise, some of the transactions involved in the scheme might remain untaxed. As I will show, the application of the tax option described as the ‘profit margin’ option in point 32 of the present Opinion allows the taxation of all transactions involved and avoids any double taxation.

The need to apply such a scheme follows, to my mind, from the combined reading of Articles 30b(2) and 73a of the VAT Directive. The former provision requires that ‘where a transfer of a multi-purpose voucher is made by a taxable person other than the taxable person carrying out the transaction subject to VAT pursuant to the first subparagraph, any supply of services that can be identified, such as distribution or promotion services, shall be subject to VAT’. The latter provision provides that ‘the taxable amount of the supply of goods or services provided in respect of a multi-purpose voucher is to be equal to the consideration paid for the voucher’.

A scheme under which VAT is accounted for each supply of goods or services would satisfy the requirement that the taxable amount is consideration received for a voucher if the value of goods and services which are in practice redeemed reaches the price paid for the voucher. 40. However, if the value of all services redeemed in practice is lower than the price paid for the voucher, the difference must also be subject to VAT. That amount is recognised as consideration for the distribution or promotion of services, in accordance with Article 30b(2) of the VAT Directive, and VAT on that ‘profit margin’ must be accounted for by the issuer of the card.

That type of scheme is not new under the VAT Directive. It applies, for example, to the taxation of travel agents (under Article 306 et seq. of the VAT Directive), 41. for which the taxable amount is based on the travel agent's profit margin (Article 308 of the VAT Directive).

In treating city cards as multi-purpose vouchers, the VAT Directive therefore requires that they be taxed in line with the profit margin option, because that tax scheme satisfies the basic principles of VAT. It avoids both double taxation and no taxation at all. That is one further reason justifying a reading according to which city cards are multi-purpose vouchers. That solution fulfils the aims of the 2016 Directive, as it clarifies the proper way of taxing city cards by eliminating all but one option used in practice. Practitioners in the field of VAT also appear to approve of such a solution. 42.

However, upholding the suggestion put forward by the Italian Government — which suggestion was accepted in the case-law of the referring court prior to the adoption of the 2016 Directive, 43. which opted for the parallel taxation of the entire consideration received in return for a city card and of each supply of goods or services actually supplied — could lead to double taxation. 44. Adopting that ‘full taxation’ option 45. could, as contended by the Commission, distort the VAT treatment of transport or admission tickets. That is precisely what the legislature wanted to avoid. 46.

To conclude, considering city cards as multi-purpose vouchers and taxing them on the basis of the ‘profit margin’ tax scheme whenever the issuer is different from the suppliers of goods and services, offers a comprehensive, uniform, transparent and neutral tax scheme. Given that the city card at issue in the main proceedings appears to satisfy both conditions imposed by the VAT Directive for an instrument to be treated as a voucher, it should be treated as a multi-purpose voucher for VAT purposes.