GFD sheds light on application of VAT on vouchers
The General Financial Directorate (GFD) issued its Information on the Application of VAT on Vouchers, clarifying the application of value added tax on various types of vouchers and illustrating tax implications on several examples from practice.
The division of vouchers into single-purpose and multi-purpose ones, and new principles for the application of VAT in this area have already been discussed several times in the previous issues of our Tax and Legal Update. The GFD’s new information provides more details on the tax aspects of vouchers and illustrates them on practical examples.
The information endeavours to distinguish between vouchers subject to new VAT regulations and discount vouchers. The basic criterion is whether a voucher is associated with the right to receive goods or services: if it is associated with such a right, it is a voucher for the purposes of the VAT Act; if not, it is not a voucher for the purposes of the VAT Act. As an example of a discount voucher, the GFD provides a CZK 100 voucher that can be used on a purchase exceeding CZK 500. Such a voucher is generally considered a token of value in accordance with the Act on Accounting.
If you accept single-purpose vouchers issued by another entity (the issuer) in their own name, it is worth paying attention to the related legal fiction under which a supply is effected between the entity accepting the voucher and the issuer. Also, in the case of complaints regarding goods or services, it is necessary to monitor the flow of supplies. This means that when a complaint regarding goods/services is made with an entity that has not issued the single-purpose voucher in their own name but only accepted it as consideration, the voucher recipient must make a correction of VAT vis-à-vis the issuer and, subsequently, the issuer shall make a correction vis-à-vis the person who has delivered the single-purpose voucher.
The information emphasises that if single-purpose vouchers are not used within a period of three years of the end of the taxable period in which the VAT payer could claim a VAT deduction, the VAT deduction must be refunded, excepting cases when it is proven that vouchers have been destroyed, lost or stolen. The fact that a voucher has not been used does not affect the voucher issuer’s tax liability.
According to the GFD’s information, the same applies to transfers of single-purpose vouchers within the EU and in third countries.
For multi-purpose vouchers, the GFD in detail analyses the method of determining the tax base. The price for which a voucher has been bought represents the base; if this price cannot be determined, it is the nominal value of a multi-purpose voucher.
The GFD also pays attention to rounding differences, giving a number of examples when payment is made by a meal voucher in form of a multi-purpose voucher. If the customer pays with a meal voucher and the seller does not return cash, the difference is regarded as a tip that is not included in the tax base. Rounding differences on the payment by meal vouchers are not included in the tax base.