9.8.4 Exemption in the Proposal

In December 2006, Directorate General for Taxation and the Customs Union of the European Commission undertook a public consultation to assist with the formulation of a proposal on the VAT treatment of vouchers.1 In the Introduction, it is stated that “vouchers continue to evolve in their scope, in some cases taking a role indistinguishable from a general payment vehicle”. The majority of the responses defined certain types of vouchers as means of payment or a “money exchange for a substitute for money”, i.e. as a financial service.2 In the Impact Assessment accompanying the Proposal, only transactions regarding certain prepaid telephone cards are identified as possibly qualifying as financial services.3 In the Proposal itself a distinction is made between vouchers and payment instruments (i.e. means of payment). According to the Commission, it is necessary to look closely at the essential nature of the operation of a method of payment. Vouchers should always lead to the supply of goods or services and are often issued to promote the sales of a particular supplier or group of suppliers or to facilitate purchases. These characteristics, when combined with the entitlement to receive goods or services (corresponding to an obligation to supply these goods or services) play a role in distinguishing vouchers from mere general payment instruments (that do not contain such specific elements). According to the Commission, the distinction between a voucher and a payment service hinges on the existence of a right to receive goods or services.4

I agree with the result of the Commission’s view, but not with their reasoning. The Commission comes to its conclusion on the basis of a narrow definition of voucher. Because I am of the view that the term voucher encompasses many more types of transaction than the ones defined by the Commission (and that, therefore, a definition of voucher is not useful), in my view, not all vouchers ‘lead to the supply of goods or services’. Some vouchers embody services. Be that as it may, transactions regarding vouchers are, in my view, not VAT exempt.