SDEU: prepaid cards single-purpose vouchers for VAT purposes?

M-GbR purchased prepaid cards (‘X-Cards’) that allowed users to top up their user accounts to purchase digital content from an online store. The X-Cards with the country code DE were intended exclusively for customers who were resident or habitually resident in Germany and had a German user account. The question was whether the vouchers in this case were single- or multi-purpose vouchers.

The CJEU emphasised that to qualify as a single-purpose voucher, two conditions have to be met cumulatively at the time of the vouchers’ issuance: the place of supply of the goods or services to which the voucher relates must be known, as must the VAT due be. This applies regardless of whether the voucher is the subject of transfers between several taxable persons.

As to the first condition, the CJEU held that at the time of issuing the X-Cards, the place where the digital content was  to be delivered to the end consumer was known, since the cards could only be used by customers residing in Germany and holding German user accounts. Thus, the place of supply was Germany.

If the digital content obtained through the X-Cards were subject to the same tax base rules and the same VAT rate in Germany, then the cards would also meet the second condition of a single-purpose voucher. However, if the digital content were subject to different rules for determining the tax base or different VAT rates in Germany, the qualification of the cards as a single-purpose voucher would not be possible.

As for multi-purpose vouchers, the CJEU then stated that their transfer is generally not subject to VAT. However, should the X-Cards qualify as multi-purpose vouchers, M-GbR may provide distribution or promotional services when reselling them, which themselves might be taxable. These services thus might be subject to VAT if provided to a taxable person who as a consideration for the vouchers provides digital content to the end consumers.