TEI urges the council of the European Union to adopt revised rules clearly setting out the VAT treatment for vouchers.

• Position: Tax Executives Institute, value added tax

On December 18, 2015, TEI submitted a letter to the Council of the European Union urging it to adopt revised rules setting out the value-added tax treatment for vouchers. The European Commission adopted a proposal to amend Directive 2006/112/EC, which addresses the common system of VAT in the European Union, as to the treatment of vouchers, in May 2012. The Council Working Party on Tax Questions has since discussed the VAT voucher dossier at length; however, the parties have not been able to reach a consensus sufficient to pass it to Ministers (via Coreper) for adoption by the Council. TEI maintains that the delay in finalizing this amendment to the VAT Directive is causing considerable concern in the business world, where vouchers are used extensively. TEI thus urged the Council to conclude its negotiations and adopt revised rules. TEI's letter was prepared under the aegis of TEI's European Indirect Tax Committee, whose chair is Paula Regales. Pilar Mata, TEI Tax Counsel, coordinated the preparation of TEI's letter.

In May 2012, the European Commission (Commission) adopted a proposal to amend Directive 2006/112/EC (VAT Directive), which addresses the common system of value added tax (VAT) in the European Union, as to the treatment of vouchers. The Council Working Party on Tax Questions has since discussed the VAT voucher dossier at length; however, the parties have not been able to reach a consensus sufficient to pass it to Ministers (via Coreper) for adoption by the Council of the European Union. The delay in finalizing this amendment to the VAT Directive is causing considerable concern in the business world, where vouchers are used extensively to meet many aims.

Tax Executives Institute, Inc. (TEI) urges the Council of the European Union to conclude the negotiations and adopt revised rules clearly setting out the VAT treatment for vouchers. We would be grateful if you would circulate this letter to the tax, internal market, and competition attaches in each of the 28 permanent representations to the EU.

About Tax Executives Institute

Founded in 1944 to serve the professional needs of business tax professionals, TEI is the preeminent association of in-house tax professionals worldwide. TEI espouses organizational values and goals that include integrity, effectiveness, efficiency, and dedication to improving the tax system for the benefit of taxpayers and tax administrators.

TEI's approximately 7,000 professionals manage the tax affairs of over 2,800 companies across all industry sectors around the world. Many of these members' companies have a business presence and/or sell into all 28 EU Member States and are involved in the sale and/or distribution of vouchers. TEI's members are accountants, lawyers, and other corporate and business employees responsible for the tax affairs of their employers in an executive, administrative, or managerial capacity, and continually monitor consumption tax developments around the world.

TEI believes it is critical to maintain a dialogue between businesses and revenue authorities when developing rules for VAT to ensure they are workable and not overly burdensome on business or tax authorities. It is also critical to protect the neutrality of the VAT system for cross-border transactions by ensuring supplies are not subject to double taxation or, indeed, unintentional non-taxation.

Comments Regarding Voucher Issue

Various Member States have taken very different positions regarding the time when VAT is due in relation to vouchers. This is less of an issue when the vouchers are redeemable in one Member State. However, when combined with the "place of supply" rules in...