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Giving a gift voucher to a loved one is a convenient, practical and safe choice. It cuts out on the logistics, saves time and most important would allow the recipient to self-choose a gift to cherish. Over the years, the gift voucher retail market share has been progressively growing, with an estimated GBP 7 billion spending in the UK alone (according to a BBC recently published article).

Our VAT specialists often ponder on the following question “Are businesses aware of the VAT treatment of vouchers, particularly when they should charge and levy the VAT?” In this article, we aim to explain how it works.

Legal Uncertainty

Prior to 01 January 2019, Council Directive 2006/112/EC (the “VAT Directive”) did not contain specific provisions regarding transactions involving vouchers, a situation which led to anything but a uniform treatment within the respective Member States. This lack of legal certainty was detrimental to businesses prompting the European Commission to introduce, in 2012, a proposal on the VAT treatment of vouchers.

Following the introduction of a second revised proposal, the Member States finally agreed on the so-called Vouchers Directive, which became effective as from 01 January 2019. It was expected that the new rules set out would ensure a uniform and consistent application by the Member States thus minimising the possibility of non-taxation or double taxation, avoid distortions of competition and significantly reduce the risks associated with VAT evasion or fraud.

What Is Considered as a Voucher for VAT Purposes?

Technically, a voucher means 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.

A voucher can either be a “single-purpose voucher” (SPV) or a “multi-purpose voucher” (MPV).

An SPV is 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 its issue.

On the other hand, a multi-purpose voucher is a voucher where the place of supply of the goods or service to which it relates are not known at the time of its issue.

VAT on Gift Cards & Vouchers

The Voucher Directive does not provide for the VAT treatment of discount vouchers, transport tickets, admission tickets to cinemas and museums, postage stamps or similar, which are therefore to be treated under the normal VAT rules. In practice, in the case of an SPV, a taxable person is deemed to be making the supply of the goods/services to which it relates, at the point of issue.

The redemption of the SPV by that same taxable person (the “issuer”) is not deemed to constitute a supply, meaning that the VAT is charged and collected only once, that is when the issuer first sells the SPV. However, where the handing over of the goods or the rendering of the services to which the SPV relates is carried by a taxable person other than the issuer (but acting in the name of the issuer), then the issuer is deemed to have supplies those goods/services to that taxable person.

Any transfer of an SPV made by a taxable person acting in the name of the issuer (such as an agent) is deemed to constitute a supply of the goods/services to which the SPV relates by the issuer.

In the case of an MPV, the actual handing over of the goods or the actual provision of the services in return for the MPV shall constitute a supply and consequently subject to VAT. So, in principle VAT should be charged upon redemption and not upon issuance of the actual voucher, unlike an SPV.

For example, a voucher purchased from a Hotel Group which can be redeemed for a weekend break (accommodation) both in Malta and in the UK, shall constitute an MPV with the pertinent VAT being charged and levied upon redemption. This because, at the point of issuance, the issuer will not be in a position to determine whether Malta VAT or UK VAT will have to be charged.


Obviously, the above is a very basic outline of the VAT treatment of vouchers and is intended to raise your awareness and perhaps foster your interest for further information on the subject. This could particularly be the case if you issue or trade in vouchers or intend to do so in the future. The VAT treatment of vouchers could result to be complex and any slips could be damaging and costly.

To define whether vouchers are subject to VAT, ask yourself the following questions:

  • Do you issue or redeem vouchers and you are unsure of the VAT treatment?
  • Do you hand over goods/supply services on vouchers issued by other taxable persons?
  • Do you intend to venture into the world of vouchers, with as much outreach as possible?

Should you struggle with defining the correct treatment, our VAT team will be glad to help you out.