Tax Alert

Luxembourg approves draft law implementing the Directive on the VAT treatment of vouchers

16 August 2017

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On 20 July 2017, the Luxembourg Government approved the draft law implementing the Directive on the VAT treatment of vouchers (Council Directive (EU) 2016/1065).

The Directive, adopted by the Council of the European Union on 27 June 2016, defines what qualifies as a “voucher”, distinguishes between single and multi-purpose vouchers and sets rules for determining the time of supply and the taxable value of the transactions in both cases.

Namely, within the Directive, single-purpose vouchers are defined as vouchers 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. A transfer of a single-purpose voucher is treated as a supply to which the voucher relates and VAT should be accounted for accordingly.

A multi-purpose voucher is any voucher which is not a single-purpose voucher.

Multi-purpose vouchers are subject to VAT when the voucher is redeemed therefore no VAT is due when such a voucher is transferred through the supply chain. The value on which VAT should be accounted for is either the price paid by the consumer, or if that is not known, the face value of the multi-purpose voucher, less the amount of VAT relating to the goods or services supplied.

The current Luxembourg legal framework does not contain any VAT provisions specific to vouchers, but Circulars no 736 and 736bis issued by the Luxembourg VAT administration consider the VAT treatment of similar instruments, namely telephone credit (whether in the form of a card or otherwise). These provisions are generally in line with the new Directive, specifically recognizing different VAT treatments for single and multi-purpose vouchers.

Any amendments to the current taxation rules resulting from the new law may require Luxembourg businesses to review the VAT treatment currently applied to their transactions involving vouchers.
Retail companies and businesses within the TMT industry may be particularly affected by such potential changes.

The details of the new draft law amending the Luxembourg VAT Act have not yet been revealed, as the draft law has been adopted by the Government but not yet published.
EU Member States have until 31 December 2018 to transpose the new rules on the VAT treatment of vouchers into their national legislation.

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