The Court of Justice of the European Union issued a judgment on April 18 2024 (Case C-68/23, M-GbR) in which, among other things, a definition of a single-purpose and a multipurpose voucher is provided. Considering how complex promotional schemes can be and how common these types of programmes are today, it is expected that the court's decision will be of great practical importance.
Background to the case
The case concerns a company that marketed vouchers with a nominal value, enabling users to redeem them for the purchase of digital content through an online shop. When purchasing the voucher, the user had to communicate their country of residence. In this way, each voucher was assigned a country code and was intended exclusively for customers who had their domicile or habitual residence in that country.
The company considered the vouchers to be multipurpose for two reasons. Firstly, in some cases it was not possible to know with certainty the identity and domicile of the user. Secondly, and giving rise to one of the questions referred to the court, the company purchased the vouchers through suppliers established in different member states, which may raise doubts over the interpretation of the provisions of articles 30a and 30b of the VAT Directive in the context of a chain of taxable persons established in different member states purchasing and selling the vouchers.
Reasoning of the court
The court pointed out that the concept of a multipurpose voucher is a residual one and that only those vouchers that cannot be considered as single purpose can be considered as multipurpose. Accordingly, the focus should always be on determining whether we are dealing with a single-purpose voucher. If the answer is negative, it can be said that we would be dealing with a multipurpose voucher.
We must first determine whether we are dealing with a voucher according to the definition given in Article 30a of the VAT Directive. In some cases, this task will be easy, but in others it will not. The difference between vouchers and discount cards or means of payment (both should be excluded from the definition of a voucher) is not entirely clear in many situations.
As regards the above, classification as a single-purpose voucher depends on the fact that, at the time of issuance of that voucher, its VAT treatment can be determined. This can only be achieved, in the court's view, when two fundamental elements of VAT are known at the time of issuance of the voucher. According to the decision by the European Court of Justice (ECJ), these elements are:
The place of supply of the goods or services to which the voucher relates; and
The VAT due on those goods or service.
If both pieces of information are known, it can be concluded that we are dealing with a single-purpose voucher. When it is not possible to determine this, by mere discarding, we could affirm that we are dealing with a multipurpose voucher.
The above conclusions cannot be altered by some users circumventing the conditions of use of the vouchers by providing misleading data (on purpose or not).
All the foregoing applies even in the event that, pursuant to the first subparagraph of Article 30b(1) of the VAT Directive, successive transfers of a voucher between taxable persons may give rise to supplies of services carried out in the territory of member states other that than where the voucher is going to be redeemed.
The court concluded by stating that in cases where we are dealing with a multipurpose voucher, the fact that VAT is not accrued at the time of its issuance because the terms of taxation of the transaction to which the voucher refers are not known does not mean that its transfer along a supply chain is outside the scope of VAT. Such transfers would be considered as promotional or distribution services, subject to VAT.
The reason for all the above, as explained in numerous recitals of Directive (EU) 2016/1065 (the Vouchers Directive), is ensuring uniform VAT treatment of vouchers, avoiding inconsistencies, double taxation, or non-taxation when they are issued and transferred between member states.
Clarity in a complex issue
The truth is that the VAT treatment of vouchers and promotional schemes in general is complex. It is increasingly complex if we take into account how these schemes have become more sophisticated over time with the help of new technologies. Today, few people have a voucher in a physical format, and everything is primarily delivered, exchanged, and redeemed through the internet. This makes the VAT treatment of these schemes even more complicated. Clear and straight-to-the-point ECJ decisions such as the one in this case are always welcome.
