What did the EU VAT Committee's new guidelines address?

The guidelines clarified the VAT rules for cross-border transactions involving single-purpose vouchers (SPVs), particularly the taxability of SPVs for both electronic and non-electronic services.

How does the ECJ ruling impact SPV taxation?

The ECJ ruling established that a voucher is considered an SPV if the place of supply is known at the time it is issued, affecting both B2B and B2C transactions across EU borders.

Where is VAT due for B2C SPV supplies for electronic services?

VAT for B2C SPV supplies of electronic services is due in the EU country where the consumer resides, as per Article 58 of the EU VAT Directive.

How is VAT handled for B2B SPV supplies?

For B2B SPV supplies, VAT is due in the EU country where the recipient business is established, according to Article 44 of the EU VAT Directive.

How are SPVs for non-electronic services taxed?

The taxation of SPVs for non-electronic services depends on the nature of the services. If linked to immovable property, VAT is due where the property is located; if related to goods without transport, VAT is due where the goods are located.

Why are these new SPV guidelines important for businesses?

The guidelines simplify VAT compliance for businesses issuing SPVs across the EU, ensuring clearer tax rules following the ECJ's ruling and helping businesses avoid costly mistakes in cross-border transactions.

EU VAT Committee's New SPV Taxation Rules for Cross-Border Transactions

In November last year, the EU VAT Committee held its 125th Meeting, where the primary focus was on clarifying how to determine which country is entitled to tax supplies made using single-purpose vouchers. Following the meeting's conclusion, earlier this year, the EU VAT Committee released guidelines on the applicable rules affected by the ruling of the European Court of Justice (ECJ) in Case 68/23 between M-GbR and the German Tax Authorities.

ECJ Ruling and EU VAT Committee Guidelines

The ECJ ruled that under the EU VAT Directive, a voucher is considered a single-purpose voucher (SPV) only if all the conditions outlined in Article 30a(2) are met. As the most critical condition, the ECJ highlighted that the place of supply must be known at the time the voucher is issued. The same also applies in situations where the vouchers are traded between businesses located in different EU countries.

The Court further added that for multi-purpose vouchers (MPV), their resale is subject to VAT if the transaction qualifies as a supply of services to the person who will ultimately redeem the voucher by delivering the goods or services to the end consumer.

Following this ruling, the EU VAT Committee unanimously agreed that for B2C supply of SPVS for electronic services, VAT is due in the EU country where the consumer lives, as defined by Article 58 of the EU VAT Directive. For B2B supplies, the rules specified in Article 44 apply, meaning that the VAT is due in the EU country where the recipient business is established.

For SPVs for non-electronic services, taxability rules depend on the nature of the services. If the services are connected to immovable property, VAT is due where the property is located. Services connected to the supply of goods without transport are taxed in the EU country where the goods are located at the time of supply.

Conclusion

The ECJ ruling and the EU VAT Committee guidelines provide clarity on cross-border VAT taxability rules for businesses issuing SPVs, making VAT compliance across the EU more straightforward. Additionally, the fact that the EU VAT Committee addresses the issue after the ECJ released its ruling underlines the importance of the ECJ in interpreting the applicable VAT rules and regulations.

Source: VAT Committee Guidelines, Circabc, ECJ Case 68/23