06 Jun New voucher’s rules
Since 1 January, 2019, new rules regarding the issuance of vouchers have been enforced. If your company issues vouchers or intends to, these rules might affect your Value Added Tax (VAT) return, cash flow and bookkeeping significantly.
What are vouchers under the new rules?
The Dutch tax authority defines a voucher as an instrument, either in paper or electronic form, that can be redeemed for goods and/or services. Any instrument which requires you to pay (additionally) for the goods or services, is considered as a discount coupon and does not fall under the new vouchers’ rules. In general, (digital) gift cards and prepaid cards are to be considered as vouchers while discount coupons are not. This classification impacts the VAT return as vouchers and coupons are treated differently for the VAT.
Most importantly for the VAT, under the new rules, vouchers are classified as: A Single Purpose Voucher (SPV) and Multiple Purpose Voucher (MPV). This distinction impacts the VAT liability.
SPV & MPV
A voucher is considered as SPV if the following are known on the issuing date of the voucher:
- The place where it will be redeemed
- The VAT amount of the good (s) or service (s) to be exchanged for
A voucher is a MPV when, at least, one of these two situation is not known at the issuing date; take for example a chain store with multiple stores in Europe, whose gift card can be exchanged at all stores in Europe, the gift card will then not be considered as a SPV, rather a MPV. In this case, the VAT rate changes from country to country; therefore, the due VAT rate is not known upon issuance.
In summary, for the VAT, issued SPV’s are taxed immediately, while MPV’s will only be taxed when the voucher is redeemed by the holder. In the past, there was no such difference. However, as a result of the new vouchers’ rules, the VAT liability for SPV’s has been shifted to issuance date; thus, if a company decides to issue SPV’s, the VAT must be accounted for in the following VAT return. This will impact the cash flow of the company. In addition, if a SPV stays unredeemed, the paid VAT cannot be recovered unless the holder of SPV decides to return his voucher. For these reasons, it is an incentive for business to issue a voucher as an MPV.
Free vouchers for goods and services
According to the State Secretary for Finance, a free SPV or MPV also fall under the new vouchers’ rules if a full or partial VAT recovery right is applied for the exchanged good and if the voucher that can be redeemed for a good is worth more than EUR 15.
If the voucher is given for free, the VAT should be calculated over the purchase price of the goods for which the voucher is meant or similar goods. If there is no purchase price, the cost price must be used.
Unlike free vouchers for goods, according to the State Secretary for Finance, free vouchers for services are VAT exempted if they are for business purposes.
If you have any questions on this topic, please do not hesitate to contact us.