The VAT treatment of vouchers in cross-border trade

Abstract: Under a long time in the European Union, the topic of taxation of vouchers have been highly discussed. Because of the lack of harmonized rules, the Member States have individually created both definitions of different types of vouchers, and rules on how to tax the different vouchers. However, the fact that the Member States use domestic rules is not a problem when the vouchers are used domestically. Nevertheless, when the vouchers are used in cross-border trade, problems such as what the taxable amount is occur. This thesis assesses the cross-border VAT treatment of vouchers by comparing the treatment when vouchers are distributed and used in domestic situations with cross-border situations. When the examination of the VAT consequences of cross-border trade with vouchers is done, the conclusion is that there are three problems occurring. The first is that, in some cases, the VAT is not paid in the same Member State as it would be if no voucher was used. The solution to this problem is that a reclassification of the distribution of these vouchers is made. The two remaining problems is that in some cases a loss of tax revenue occurs, and in some cases more VAT than supposed is paid to the tax authorities. The solution to these two problems is that the problematic transactions falls outside the scope of VAT. If these adjustments are made to the VAT treatment of cross-border trade with vouchers, the rules would be harmonized within the European Union and furthermore neutral.