The European Court of Justice interpreted the common concept of “single-purpose voucher”
C‑68/23. – M‑GbR | The European Court of Justice interpreted the common concept of “single-purpose voucher”
The plaintiff in the case is a German economic entity that marketed top-up cards through intermediary companies, which could be used to purchase digital content – services provided electronically for VAT purposes.
During the relevant period in 2019, the plaintiff obtained the top-up cards from a taxpayer established in Great Britain and resold them to several other member states, with intermediaries (taxpayers) in each affected member state. The cards were provided with country codes depending on which member state they authorized purchases in. Thus, users in Germany could purchase with cards labeled “DE,” but it could happen that a final consumer used a “DE” coded card whose residence was not in Germany.
Therefore, the plaintiff considered the top-up cards to be “multi-purpose vouchers” because the place of supply for the services obtainable with the card could not be determined with certainty. (In the case of electronic services provided to non-taxable persons, the place of consumption – i.e., the place of the customer’s residence – determines the place of supply.) Therefore, the plaintiff treated the transfer of the cards to the intermediary company as a transaction outside the scope of VAT. In contrast, the German tax authority’s position was that the top-up cards labeled “DE” were single-purpose vouchers, intended by the German intermediary for users residing in Germany, and thus the transfer of the top-up cards was a taxable transaction, as the place of supply of the services available through the cards can be identified.
In its judgment No. C 68/23, the European Court of Justice pointed out that, under the “Voucher Directive” introducing regulations on vouchers, a uniform assessment of vouchers within the Union must be ensured. In pursuit of this objective, the quality of a “single-purpose voucher” is not affected if someone purchases a “DE” coded card disregarding the usage conditions and is not residing in Germany. If the VAT rate applicable to services available through the “DE” coded cards is known, the instrument should be classified as a “single-purpose voucher” from a VAT point of view, making the transfer of the cards subject to VAT. Referring to the provisions of the “Voucher Directive,” the Court also explained in its judgment that if taxable persons sell “multi-purpose vouchers” to each other within a distribution chain (the transfer of the instrument in this case is outside the scope of VAT), but separate independent services can be identified between the parties, such as distribution of sales and promotional services, the provision of such services is subject to VAT.
