Issue and sale of vouchers: Introduction of harmonised regime...Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around

Issue and sale of vouchers: Introduction of harmonised regime Webinar

7 December 2016

Ana Royuela | Barcelona (Moderator) Benjamin Bergau | Frankfurt Martin Morawski | Amsterdam Adam Peacock | London

© 2016 Baker & McKenzie LLP

Adam Peacock London

+44 20 7919 1868 [email protected]

Benjamin Bergau Frankfurt

+49 69 2 99 08 252 [email protected]

Speakers

Martin Morawski Amsterdam

+31 20 551 7198 [email protected]

Ana Royuela Barcelona

+34 93 206 08 51 [email protected]

mailto:[email protected]





Introduction: Why a Vouchers Directive?

3

Vouchers are increasingly being used as a mechanism to increase sales and reach new customers

New types of vouchers/credits/prepayments for goods and services Increase of cross border sale and distribution of "vouchers"

(e-commerce enables cross border B2C sales of goods and services) This results in an increasing importance and complexity of voucher rules

(mainly, but not exclusively B2C).


Why do vouchers cause VAT problems?

4

Unclear legislative framework and lack of consistency on: Definition: what is a voucher? Multiple Purposes vs Single Purpose: MVP/SPV Distribution chain: what if value changes? Distribution/Intermediation Agents Taxable base upon redemption


Current treatment

5

Jurisdiction Key topic Spain • Distribution fee is exempt from VAT as vouchers are regarded as a means of

payment. • Distribution services are therefore regarded as financial services related toa

means of payment.

Germany • Distincion between 'goods/service vouchers' (similar to SPVs with; immediate taxation) and 'face value vouchers' (similar to MPVs with taxation on redemption).

• Under current legislation it is difficult to determine the VAT impllications of goods/service vouchers when services will only be specified upon redemption (e.g. invoicing issues, crediting for unredeemed vouchers, etc.).

Belgium • Issue of vouchers, resale and supply outside the scope of VAT, being characterised as a means of payment.

Austria and Finland • VAT due on issue only if Gift Card entitles the holder to specifically identified purchase, e.g. a voucher for computer game x.

Ireland • Distincion not between SPVs and MPVs, but vouchers sold through a distribution chains, vouchers issued at a discount and vouchers supplied as things in action.

UK • Different treatment for "credit" and "retailer" vouchers. • Issue of all vouchers disregarded until decision in Lebara.


Elements of the Voucher Directive

6

Concept of "voucher" Taxable event Time of taxation Taxable amount Distribution services Unredeemed vouchers


Elements of the Voucher Directive – Concept of "voucher"

7

Single Purpose Voucher

Multi Purpose Voucher

No Voucher (e.g. payment instrument)


Elements of the Voucher Directive – Concept of "voucher"

8

Voucher An instrument where there is an obligation to accept it as

consideration or part consideration for a supply of goods or services and where the goods or services to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument.

Single-purpose voucher A voucher 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.

Multi-purpose voucher A voucher other than a single-purpose voucher.


Elements of the Voucher Directive – Taxable event

9

Single-purpose voucher Supply of each voucher. Actual underlying supply is not subject to

VAT. Multi-purpose voucher

Actual underlying supply. The supply of each voucher is not subject to VAT.

EUR 9 EUR 10

Voucher Voucher

Telecom service

Telco Distributor End-customer


Elements of the Voucher Directive – Time of taxation

10

Single-purpose voucher At the time of the supply of the voucher.

Multi-purpose voucher At the time of the actual underlying supply. What about (partly) unredeemed vouchers?

EUR 9 EUR 10

Voucher Voucher

Telecom service



Elements of the Voucher Directive – Taxable amount

11

Single-purpose voucher The consideration actually received for the voucher.

Multi-purpose voucher The consideration "paid" for the voucher or in the absence of such

information, the monetary value indicated on the multi-purpose voucher itself or in the related documentation.

EUR 9 EUR 10

Voucher Voucher

Telecom service



Case study – online retailer

12

Online retailer (UK)

SPV

£9 (inc. VAT)

E-book (no VAT)

UK customer


MPV

£9 (no VAT)

E-book (VAT)

UK customer


Payment Instrument

£9 (no VAT)

E-book (VAT)

UK customer

Single purpose vouchers Taxable amount: £9 Time of supply: issue of voucher VAT due whether or not redeemed. No VAT due on redemption – impact on systems?

Multi-purpose vouchers Taxable amount: £9 Time of supply: redemption No VAT if voucher not redeemed

Payment instruments Taxable amount: 0 Do MPVs consitute payment instruments? Does a security for money constitute an MPV?


Case study – distributor

13


SPV

£8 (plus UK VAT)

E-book (no VAT)

Distributor (UK)

SPV

£9 (inc. UK VAT)


MPV

£8 (no VAT)

E-book (UK VAT)

UK customer

Distributor (UK)

MPV

£9 (no VAT)

Distribution services (£1 plus VAT)

Key questions 1. What is the taxable amount upon redemption? 2. Impact on Argos Distributors?

• No VAT applied to distributor's services if distributor acts as principal or undisclosed agent. • If issuer is not retailer, retailer nevertheless regarded as making a supply of the goods/services to the

issuer.

UK customer


Case study – overseas distributor

14


SPV

£8

E-book (no VAT)

French customer

Distributor (France)

SPV

£9 (inc. French VAT)


MPV

£8 (no VAT)

E-book (French VAT)

French customer


MPV

£9 (no VAT)

Distribution services (£1 subject to r/c)

Hotel (Germany)

SPV

£8 (plus German VAT)

German hotel room (no VAT)

French customer


SPV

£9 (inc. German VAT)

r/c liability


Case study – areas of uncertainty

15


SPV?

£9

E-book

Airport Retailer

SPV?

£9

Clothing

UK customer

Restaurant (UK)

SPV?

£9

Restaurant services

UK customer

UK customer


Local pending cases

16

EUR 9 EUR 10

Voucher Voucher

Telecom service


Questions?

Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organisations, reference to a "partner" means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an "office" means an office of any such law firm. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.


www.bakermckenzie.com

Issue and sale of vouchers: Introduction of harmonised regime Webinar

7 December 2016

Ana Royuela | Barcelona (Moderator) Benjamin Bergau | Frankfurt Martin Morawski | Amsterdam Adam Peacock | London

Documents

Issue and sale of vouchers: Introduction of harmonised regime...Baker & McKenzie LLP is a member firm of Baker & McKenzie International, a Swiss Verein with member law firms around