2019 VAT amendment: treatment of meal vouchers

In the first paper, the GFD confirmed that meal vouchers are vouchers in the meaning of the VAT Act. The second paper gives more detailed guidance on how to treat meal vouchers: the VAT treatment will depend on whether they are single-purpose or multi-purpose vouchers. The paper concludes that in most cases, they will be multi-purpose vouchers, i.e. vouchers where the tax rate or the place of supply is not known at the time of their issue. Yet, it is also possible that the contractual conditions of some meal vouchers will make them single-purpose vouchers. The paper assumes that meal vouchers are transferred from their issuers to employers, and subsequently to employees, for consideration. How will the treatment of a single-purpose meal voucher differ from the multi-purpose one?

For VAT purposes, the transfer of a single-purpose voucher shall be treated as a supply of goods or services covered by the voucher. The company issuing the single-purpose meal vouchers will pay VAT on the amount of the voucher, including any commission charged to the customer (usually an employer), immediately at the point of their transfer to the employer. For catering services, the meal voucher including the commission paid by the employer will be subject to 15% VAT. The employers receiving and subsequently distributing the meal vouchers to employees for consideration shall pay the output VAT and shall have full entitlement to VAT deduction on the supply received (the amount of the meal vouchers and the commission). The intermediary’s commission charged by the issuer of the meal vouchers to their partners with whom the meal vouchers are used will be subject to a standard 21% VAT rate.

For multi-purpose vouchers, VAT shall only be paid at the time when the meal voucher is used by the employee. The tax base shall be the nominal amount given in the meal voucher, regardless of the amount of payment received from the employee. The commission charged to the employer and to the business partners will be subject to a standard 21% VAT rate.

As the issue and redemption of multi-purpose meal vouchers is outside the scope of VAT, a question has arisen whether the meal vouchers’ issuer will have the full entitlement to VAT deduction on these supplies. The paper concluded that the issuer indeed is entitled to VAT deduction in the full amount, on all direct and indirect costs connected with the issue, as well as the distribution or redemption of multi-purpose meal vouchers.

Employers who provide meal vouchers to their employees should therefore view them as vouchers and be careful about their VAT treatment.