Explanation of Voucher Types (SPV/MPV)

Numerous entrepreneurs use vouchers, gift certificates, and discount promotions to promote their products and services. This is an effective strategy to expand both sales and customer base. However, VAT regulations can be complicated. It is important to determine whether it is a single-use or multi-use voucher. Depending on this, the VAT due varies.

What is a voucher?

In the European Union, the rules regarding vouchers are uniform. But let's define what a voucher exactly is. A voucher can take any form, such as a paper coupon or a card with a (digital) credit on it. This credit can be used to obtain a product or service without additional payment. In other words, a voucher is equivalent to a specific product or service. If an extra payment is required, it no longer qualifies as a voucher. However, if there is an option to pay extra for a higher-priced product or service, it remains a voucher. Furthermore, it must be clear at which supplier or service provider the voucher can be redeemed.

There are two types of vouchers:

- A Single Purpose Voucher (SPV): redeemable for single use;

      - A Multi Purpose Voucher (MPV): redeemable for multiple uses.

A Single Purpose Voucher (SPV):

A Single Purpose Voucher (SPV) is defined as a voucher where, at the time of issue, it is already clear for which specific goods or services it can be redeemed, including the applicable VAT rate or any exemption.

For an SPV, VAT must be paid at the time of sale or issue, as well as with each resale. The VAT is calculated as follows:

      - 9/109 x selling price for a low-taxed performance;

      - 21/121 x selling price for a high-taxed performance.

Examples of single use:

      - A issues a gift voucher for a jewelry set (21% VAT) of € 50. VAT 21/121 (x) € 50 = € 8.67.

      - B issues a voucher (9% VAT) of € 10. VAT is 9/109 (x) € 10 = € 0.82.

      -C issues a voucher (9% VAT) for a random item of € 11. VAT is 9/109 x € 11 = € 0.91.

These vouchers can be redeemed at a select group of entrepreneurs. The voucher represents a product or service for which the VAT rate is fixed. Upon issue and/or resale, there is therefore a VAT obligation, even if the ultimate delivery or service has not yet taken place. The turnover from these vouchers is directly included in the VAT assessment. In the event of resale through different parties, the margin (selling price minus purchase price) is subject to VAT. This taxed resale can be advantageous for the right to VAT deduction, which makes the sale of such vouchers attractive, especially for entrepreneurs who also offer exempted services, such as in the sports, social, cultural, educational, medical, financial, and rental sectors.

A Multi Purpose Voucher (MPV)

A Multi Purpose Voucher (MPV) is a voucher for which, at the time of issue or sale, it is not established for which specific goods or services with a VAT rate of 9% or 21% it can be redeemed. VAT is only calculated when the voucher is redeemed.

Examples of multi-use:

• A offers a gift voucher that can be redeemed for a jewelry set with 21% VAT OR another sale with 9% VAT, both worth €25.

• B sells a €25 voucher that can be spent at large retail chains.

• C offers a €20 voucher that can be used for a piece of jewelry or a watch, with a VAT rate of 9% or 21%.

Upon issue or sale, it is not yet known for which product or service the voucher will ultimately be redeemed. VAT is therefore only calculated when the voucher is redeemed. This means that as an entrepreneur, you owe VAT when redeeming the voucher, not when issuing it. With an MPV, you can postpone the VAT levy, which can be financially advantageous if the voucher is not redeemed, while you have already received the amount including VAT.

Important to remember:

It is essential to know when you must remit VAT. Incorrect VAT treatment can lead to double payment or overpayment of VAT (with possible additional assessments from the Tax Authorities, even if VAT has already been paid), or to additional assessments with penalties if no VAT was remitted upon issue. Even when vouchers are provided free of charge, VAT may be due, based on the (purchase) value of the underlying product.