Draft change to the VAT Directive

The European Commission issued a draft Council Directive to amend the VAT Directive[1] with regard to applying VAT to coupons/vouchers. 1 January 2015 was suggested to be the effective date of the Directive.

The Directive is designed to introduce a harmonized VAT procedure for all types of coupons/vouchers to avoid inconsistencies that would result in double taxation or no taxation at all. Pre-paid telephone cards, gift vouchers, and discount coupons are the most common types of coupons/vouchers.

The Directive would introduce new, or alter the current, rules for applying VAT to coupons/vouchers and define categories of coupons/vouchers. The draft also defines the moment at which the duty to return tax on the coupons/vouchers is established (i.e. upon the sale of the coupon/voucher or upon taking advantage of the benefit granted thereunder).

[1] Council Directive 2006/112/EC, of 28 November 2006 on the common system of value added tax