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Belgian VAT treatment of vouchers: too little too late?

Belgium finally issued a draft act on 7 December and a circular letter in the form of FAQ’s on 8 December to implement the VAT Directive 2016/1065 relating to vouchers.

Definitely too late

This 4 page Directive dates back from 2016 and must be implemented in the Member States by… 1 January 2019!

The timing consequently barely gives any time to adjust IT and accounting systems to a rather complex and to date unclear legislation. The retail sector has already asked that the VAT authorities display some flexibility at the beginning of 2019. In addition, whether the draft legislation will actually be discussed and voted by the end of the year remains unclear considering the current governmental crisis in Belgium.

Too little too! Unclear concepts and open issues

The new legislation specifically excludes a lot of commercial instruments (prepaid phone cards, cinema tickets, means of payment, free rebates,…) making the concept of voucher itself unclear with grey zones such as e.g. cards that can be bought to purchase music, games or books online.

A fundamental distinction among vouchers is made between single-purpose vouchers (“SPV’s”) and multi-purpose vouchers (“MPV’s”). The SPV’s VAT treatment is known when they are issued and each sale of a SPV triggers VAT on the transfer price. By derogation, the MPV’s VAT treatment is unclear when they are issued. VAT on MPV’s value may therefore only be collected when actual redemption takes place. Commissions for the supply of promotional or distribution services should however be invoiced by intermediaries and trigger VAT in a MPV framework. 

Important issues have neither been treated in the FAQ’s, nor in the draft legislation. Queries therefore remain open e.g. on the concept of an intermediary acting in its own name in a SPV framework, on the price of the commission subject to VAT in a MPV framework, but also on the timing of such invoicing and the impact of MPV’s on the VAT deduction right, most notably in case of unredeemed vouchers, etc.

The Belgian VAT authorities have already stated that the FAQ’s can be amended if it appears that the sector faces difficulties. This seems indeed a more than distinct possibility and we recommend that you contact your KPMG experts in case you have any query on the VAT treatment of your voucher schemes.

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Veerle Coussee

Indirect Tax

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