Official Journal of the European Union

C 11/27

Opinion of the European Economic and Social Committee on the ‘Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax, as regards the treatment of vouchers’

COM(2012) 206 final — 2012/0102 (CNS)

2013/C 11/06

Rapporteur: Mr PÁLENÍK

On 24 May 2012, the Council of the European Union decided to consult the European Economic and Social Committee, under Article 113 of the Treaty on the Functioning of the European Union, on the

Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax, as regards the treatment of vouchers

COM(2012) 206 final — 2012/0102 (CNS).

The Section for Economic and Monetary Union and Economic and Social Cohesion, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 2 October 2012.

At its 484th plenary session, held on 14 and 15 November 2012 (meeting of 14 November 2012), the European Economic and Social Committee adopted the following opinion by 116 votes to none, with 18 abstentions.

1.   Summary of the EESC's conclusions and recommendations


On 10 May 2012, the Commission presented its Proposal for a Council Directive amending Directive 2006/112/EC on the common system of value added tax, as regards the treatment of vouchers. The aim is to subject vouchers to comprehensive, neutral and transparent taxation.


The Commission wishes to introduce common rules to prevent double taxation and tax avoidance. It is convinced that maintaining the current state of affairs will increase imbalances in the single market, leading to distortion of competition as a result of conditions not being the same for all participants in that market.


In recent times, in particular, there has been a substantial rise in the use of vouchers. Their various applications and uses give rise to ambiguity when it comes to tax liability. The clearest possible rules therefore need to be set out for all Member States in order to avoid imbalances in the single market.


The EESC welcomes the endeavour to define the various forms of vouchers as precisely as possible. The aim here is to prevent attempts at tax avoidance when they are used. At the same time, the rules will ensure that issuers of vouchers will not be at a disadvantage compared with their competitors.


The EESC particularly welcomes the Commission's endeavour to do away with excessive administrative burdens in the distribution of multi-purpose vouchers, where only the redeemer should pay tax since only the redeemer knows when and how the voucher was used.


There will be no added value in defining the rules for tax obligations relating to the treatment of vouchers unless all Member States respect those rules. For this reason, it is essential that they abide by common rules and remove various exemptions that distort competition and dilute the competitive environment.


The Commission is seeking to change the VAT directive as it applies to vouchers because of the expansion in telecommunications services, with prepaid phone credits accounting for a large part of the total volume of vouchers.


The EESC would like to draw attention to a number of issues that need to be resolved before the directive comes into force. These mainly involve possible problems with different tax exemption limits in individual Member States when vouchers are given for free, the lack of transitional provisions and the absence of rules to cover the non-redemption of single-purpose vouchers.

2.   Main elements and background to the opinion


Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax lays down rules on the time and place of supply of goods and services, the taxable amount, the chargeability of value added tax (VAT) and the entitlement to deduction. However, these rules are not enough to ensure consistency in all aspects of voucher taxation. The result is market imbalances serious enough to impact adversely on the proper functioning of the single market.


The uncoordinated approach that currently prevails between Member States gives rise to significant market imbalances and these must be removed. For this reason, the Commission proposes introducing common rules to ensure certain and uniform treatment, to avoid inconsistencies, distortion of competition, double or non-taxation and to reduce the risk of tax avoidance in relation to vouchers.


Vouchers have a variety of characteristics, which makes them problematic in terms of taxation. It is therefore necessary to distinguish between their various types and establish clear rules by which this will be done.


The aim of the directive is to distinguish payment instruments from vouchers and to define the latter, which can have physical or electronic forms depending on their use. Obligations on the issuer of vouchers are also specified.


A voucher is a right to receive goods or services or to receive a discount. However, these rights are often transferred from person to person without being redeemed. To avoid the risk of double taxation, were the service represented by such a right to be taxed, it is necessary to establish that the assignment of this right and the redemption of goods or services should be regarded as one single transaction.


To ensure neutrality, the tax obligation should relate to a single transaction for goods or services supplied in return for the voucher.


The directive provides for vouchers issued by travel agents to be taxed in the Member State in which the travel agent is established. To counter possible attempts to shift the place of taxation, goods or services supplied using these vouchers are also subject to this provision.


Where vouchers pass through a distribution network, the Commission proposes that the end value be established on issue, which means that the level of VAT remains unchanged throughout the distribution process of multi-purpose vouchers.


If vouchers are distributed by a taxable person acting in his own name but on behalf of another person, the taxable person would be deemed to have received and supplied the vouchers himself. Should the distribution involve multi-purpose vouchers where taxation takes place only once the voucher is redeemed, that would result in adjustments to all stages of the distribution chain, generating little or no new tax revenue. In order to avoid excessive administrative burdens, a taxable person distributing such vouchers should not be seen as having received and supplied the voucher himself.


The Commission defines the taxation of multi-purpose vouchers when distributed. Where the distributor makes a profit by selling to another distributor, the service of distribution should be taxed based on the distributor's margin.


The proposal for a directive envisages abolishing all exemptions claimed by Member States relating to taxation of the supply of goods or services across borders. This provision would put a stop to the possibility of double taxation or non-taxation.


The Commission divides vouchers into single-purpose and multi-purpose vouchers depending on use. Single-purpose vouchers represent the right to receive a supply of goods or services where the place of supply and the amount received for the voucher is known. In the case of single-purpose vouchers, VAT is payable on the amount received for the voucher, even if payment was made before the supply of the goods or service. In the case of multi-purpose vouchers, tax liability is incurred only when the voucher is redeemed.


Where vouchers provide a discount on the supply of goods or services, the Commission determines this to mean that the supplier has provided a service to the issuer of the voucher if it is redeemed.


Where a reduction in the price of the goods and services is granted in return for a voucher, the reimbursement received by the redeemer from the issuer of the voucher constitutes the taxable amount of the promotional service provided by the redeemer to the issuer.


In the case of multi-purpose vouchers only the redeemer of the voucher knows what has been supplied, when and where. To ensure that VAT is paid, the redeemer alone should be liable for payment of VAT to the tax authorities on the goods or services supplied.


The Commission addresses the matter of ensuring the correct application and collection of the VAT due where vouchers are distributed across borders, if this distribution creates a separate service distinct from the goods or services being acquired for the voucher.


Since the simplification, harmonisation and modernisation of the value added tax rules applying to vouchers cannot be achieved by the Member States alone, the Commission has proposed this directive at Union level in accordance with Article 5 of the Treaty on European Union.

3.   General observations


The EESC welcomes the Commission's attempt at a simplification, harmonisation and modernisation of the value added tax rules in the single market. As things stand, when Member States address taxation in relation to vouchers on their own, double taxation or tax avoidance occurs, distorting the single market.


The EESC welcomes the Commission's approach in expanding the VAT directive as regards the treatment of vouchers. However, it urges the Commission in the near future to also examine other – by no means negligible – markets in goods and services, such as transport, smartphones, the internet and social networks.


Changes to the directive do not address the problem of coupons, which are used in a similar way to vouchers. If the rules are changed only for vouchers, a growth can be expected in the use of instruments that are similar in nature but for which there are no clearly defined rules. It would be expedient, therefore, to add the concept of "coupon" to the directive and lay down the rules for dealing with coupons.


The directive is being amended primarily because of the growth in the use of vouchers in telecommunications, which accounts for most of their market. The EESC recommends that the Commission carefully define the use of telephone vouchers, since modern technologies make their potential uses very broad.


The EESC agrees with expanding the directive to cover VAT in relation to vouchers. Neither the Sixth VAT Directive (1) nor the VAT Directive (2) provides for rules on the treatment of transactions involving vouchers. As a result, problems arise with the taxable amount or the time or place of the transaction. In the case of crossborder distribution of vouchers, there has been uncertainty surrounding transactions and difficulties of interpretation for both issuers and distributors of vouchers.


The common VAT rules were adopted in 1977 and the single market now has to deal with a number of changes that have emerged over time as a result of new ways of doing business. For this reason, it is essential that the VAT rules are updated in line with changes in the way market operators are behaving. Vouchers and how they are taxed is one of the changes that were not foreseen in the past and now have to be covered in the rules.


Establishing clear rules will resolve several questions facing the Court of Justice of the European Union. The Court has issued a number of partial guidelines on this matter, but these have not addressed the issue in its entirety. The EESC therefore welcomes the laying down of conditions regarding VAT in relation to vouchers that establish clear rules for business and eradicate both double taxation and non-taxation.


The EESC welcomes the defining of single-purpose, multi-purpose and discount vouchers, which clarifies the rules that market operators must observe in what is a very broad area.

4.   Specific comments


The EESC welcomes the distinction made between payment services and vouchers. It also welcomes the distinction established in Article 30a of the proposal for a directive between single-purpose, multi-purpose and discount vouchers. This amplification means that the various types of voucher are now defined.


A maximum period should be established for redemption of the voucher by the consumer, since without this problems arise with reimbursing VAT if tax rates change.


The defining in Article 30b of a single transaction as the provision of a voucher that bears a right to a supply of goods or services and the subsequent supply of these goods or services is to be welcomed and simplifies the fulfilment of tax obligations. This article should also be linked to Article 74c.


Article 65, which defines both when VAT becomes chargeable and the taxable amount, substantially simplifies the use of single-purpose vouchers.


The procedure needs to be specified for single-purpose vouchers. Single-purpose vouchers are taxed at the time of their sale. If, however, a single-purpose voucher is not redeemed then, as a decision of the Court of Justice has confirmed, there is no right here to recover tax from the issuer of the voucher. However, the issuer has already paid VAT.


Greater detail is needed for the procedure to be followed in the case of multi-purpose vouchers where the distributor's margin is non-existent or negative and where some Member States have different taxable bases or zero rating – for pharmaceutical products, for example.


The Commission lays down that in so far as the goods or services supplied upon redemption of a voucher are taxed, the taxable person is entitled to deduct the VAT incurred on expenditure in relation to the issue of the voucher. It should be clarified that this cost of VAT is deductible even if those goods or services are supplied by someone other than the issuer of the voucher.


The EESC sees potential problems in paragraphs 1 and 2 of Article 74a, where complications may arise in the case of multi-purpose vouchers used across borders. It could be difficult to quantify the taxable amount and the nominal value of the transaction in relation to different VAT rates in the countries in which vouchers are used.


The EESC also sees another problem regarding the transition arrangements needed when introducing uniform tax rules for vouchers – especially the duration of such arrangements, since many multi-purpose vouchers have a lengthy redemption period.


An excessive administrative burden may arise where parts of a transaction are effected in different Member States. One example would be the partial consumption of telecommunication service credits in different Member States.


A number of questions also arise when vouchers are given away as a means of promoting goods or services. In this case, they are often not redeemed or are redeemed without the knowledge of the issuer, which then makes taxation difficult.


As matters stand, several Member States have limits up to which various promotional vouchers for goods or services for companies are exempted. These limits vary widely because of differences in the economic strength and size of markets in the Member States. These countries would have to remove these exemptions in order to prevent distortions in the single market. This would put a stop to possible speculation by companies seeking to optimise their tax liability by producing and distributing promotional vouchers in countries that have tax exemption limits for such vouchers. While a limit can be retained, it should be made the same for everyone and should probably be restricted to vouchers, since a general limit for promotional materials would create problems.


The EESC expects that the introduction of common rules in all Member States and the eradication of opportunities for tax evasion will increase VAT collection from vouchers and hence the tax revenue of the Member States and will reinforce the scope, neutrality and transparency of this form of taxation. The change to the directive will thus have an impact on the European Union budget which – although this is very difficult to quantify – the EESC expects to be positive.


There has been substantial increase, in recent years in particular, in the use of vouchers – or discount vouchers – for goods or services. The types and uses of these vouchers are constantly expanding and this will undoubtedly continue. It must therefore be assumed that new rules will be needed for new types of vouchers that will not have a clearly defined use.

Brussels, 14 November 2012.

The President of the European Economic and Social Committee


(1)  Council Directive 77/388/EEC of 17 May 1977 on the harmonization of the laws of the Member States relating to turnover taxes - Common system of value added tax: uniform basis of assessment (OJ L 145, 13.6.1977, p. 1) ("Sixth VAT Directive").

(2)  Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006, p. 1) ("the VAT Directive"), replacing the Sixth VAT Directive as from 1 January 2007.