VAT on Non-Redeemed Vouchers: Legal Insights from Dutch Supreme Court Ruling

On 28 February 2025, the Dutch Supreme Court (Hoge Raad) issued a decision on the VAT treatment of non-redeemed auction vouchers. This ruling directly addresses a recurring question in the digital economy: if a consumer purchases a voucher entitling them to a service but ultimately does not redeem it, is VAT still due? The Supreme Court’s judgment provides a clear and authoritative answer and offers a broader framework for how advance payments and unused entitlements are treated under Dutch and EU VAT law.

This case - together with an overview judgment published in V-N 2025/11.12 - clarifies the tax position for businesses offering vouchers, gift cards, or similar pre-paid mechanisms, particularly those operating in the leisure, travel, hospitality, and e-commerce sectors.

Facts and circumstances of the case

The proceedings arose from the business model of a Dutch VAT group that operated an online auction platform specializing in leisure-related services. Consumers visiting the platform could place bids on offerings such as hotel stays, restaurant meals, wellness treatments, and similar experiences, all provided by third-party businesses. These offerings were marketed in the form of auction lots, and the highest bidder would win the right to obtain a voucher - commonly referred to as a 'veilingbon' - which could then be redeemed directly with the supplier.

Once the auction concluded, the consumer would pay the winning bid amount to the auction platform and receive a digital voucher containing the relevant details and redemption instructions. The platform operator acted in its own name but for the account of the third-party service providers, functioning under a commissionaire arrangement as defined in Dutch VAT law. The consumer would be responsible for contacting the service provider and using the voucher within a set validity period.

While the process appeared straightforward, a significant number of vouchers were never actually redeemed. These 'no-show' scenarios raised questions about the proper VAT treatment of the initial payment. The company had, in previous years, entered into settlement agreements (vaststellingsovereenkomsten) with the Dutch Tax Authorities, confirming that VAT was due at the time of payment - even in the case of non-redemption. However, the company later challenged this treatment, seeking a refund of VAT already paid on unused vouchers.

The dispute before the courts focused on whether a taxable supply had taken place in instances where the consumer paid for a voucher but never redeemed it, and whether the issuance of the voucher alone was sufficient to trigger VAT liability.

The legal framework: Supply, prepayment, and VAT chargeability

The legal foundation of the case rests upon a combination of national and European VAT provisions that jointly define the scope and timing of taxable supplies. The starting point is Article 1 of the Dutch VAT Act 1968 (Wet op de omzetbelasting 1968), which establishes that VAT is levied on the supply of goods and services performed for consideration. This general principle is further refined in Article 13(2) of the same Act, which states that if a payment is received in advance of a service, VAT becomes chargeable at the moment of payment, provided that the future service is sufficiently specific.

This provision plays a pivotal role in cases involving prepayments such as voucher sales. When a consumer pays for a right to a service at a future time, and the nature of the service is clear enough at the moment of payment - such as a hotel stay or dinner arrangement - VAT law treats that payment as a taxable event. The transaction is not dependent on whether the service is later used, but on the legal and economic reality that the consumer has obtained an enforceable right.

Complicating matters further is Article 4(4) of the VAT Act, which incorporates the so-called commissionaire fiction. This rule deems that when a party acts in its own name but on behalf of a third party - such as an auction platform facilitating transactions between consumers and service providers - that party is treated as having supplied the goods or services itself for VAT purposes. This means that the VAT liability rests with the platform operator even if the underlying service is delivered (or not delivered) by a third party.

These national rules must be interpreted consistently with the EU VAT Directive (2006/112/EC), which forms the broader legal framework for VAT in all EU Member States. Article 2 of the Directive sets the basic condition that VAT is due on supplies of goods and services for consideration. Article 65 further establishes that when payment is made before the taxable event, VAT becomes due at the time of payment. Crucially, the Court of Justice of the European Union (CJEU) has confirmed in cases such as Air France-KLM and Hop!-Brit Air SAS (C-250/14 and C-289/14) that VAT remains chargeable on prepayments, even when the service is not ultimately consumed, as long as the supplier has made the service available and retained the payment.

Taken together, these provisions define a comprehensive legal framework in which the issuance of a voucher is not merely a conditional promise but a completed supply. The consumer’s failure to redeem the voucher is therefore commercially relevant but fiscally irrelevant. The supplier has fulfilled its VAT obligations by granting access to a specific entitlement for consideration.

Is VAT due on unused vouchers?

The taxpayer’s core position was that when a consumer fails to redeem the voucher, there is no actual performance of a service. Therefore, no VAT should be due. In contrast, the Tax Authorities maintained that issuing the voucher constituted a taxable supply, and that the supplier had fulfilled its obligation by enabling the consumer to redeem the service.

Supreme Court’s judgment

The Supreme Court rejected the taxpayer’s argument and confirmed that VAT is due on the issuance of a voucher for consideration, regardless of whether it is redeemed. Its reasoning was based on five interrelated findings:

1. Issuing a voucher is a taxable supply

The consumer receives an individual, enforceable right to receive a defined service. The obligation to perform arises upon issuance—not upon actual use. Thus, a taxable event has occurred.

2. VAT becomes chargeable upon payment

If the service is sufficiently specific at the time of payment (e.g., nature of the service, redemption conditions), VAT becomes due immediately. There is no requirement to await redemption.

3. No VAT refund for non-use

The consumer bears the risk of non-redemption. Since the supplier’s obligation is fulfilled upon providing the entitlement, the lack of subsequent use does not entitle the supplier to reclaim VAT.

4. Prior settlements are binding

The Court ruled that the taxpayer could not depart from its previous agreements with the Tax Authorities. A VSO reflects a legally binding understanding of the VAT treatment and cannot be unilaterally invalidated.

5. Full compatibility with EU VAT law

The judgment affirms that the Dutch treatment aligns with European VAT principles. The taxable moment is the transfer of a defined right for consideration, irrespective of subsequent use.

V-N 2025/11.12: Strengthening and clarifying the principle

In the overview ruling V-N 2025/11.12, the Dutch courts reaffirmed the key conclusions of the Supreme Court. The ruling provides additional clarity for tax practitioners:

• The right to receive a service (a voucher) is a taxable supply once issued and paid.

• Actual use of the service is not required to establish VAT liability.

• The supplier must be ready and able to perform; the consumer’s non-use is commercially relevant, but not fiscally decisive.

This judgment functions as both a clarification and a reaffirmation of Dutch tax policy in this area.

Implications for businesses: Legal and operational takeaways

This jurisprudence offers businesses much-needed clarity while also imposing important obligations. One of the most significant implications is that advance payments for vouchers create an immediate VAT liability. As soon as a customer pays, VAT must be accounted for, regardless of whether the service is ultimately provided. This has direct consequences for cash flow management and tax planning, making it essential for businesses to factor these liabilities into their financial operations.

Additionally, settlement agreements with the Tax Authorities – such as agreed positions on VAT treatment (e.g., VSOs) – are legally binding and have long-term effects. It is crucial for businesses to draft these agreements carefully and ensure full understanding of their implications before committing.

The risk associated with vouchers that are never redeemed lies not with the supplier, but with the consumer. From a VAT perspective, non-redemption is a commercial risk and does not eliminate the obligation to remit VAT. Businesses must therefore treat such risks as part of their commercial strategy, not their tax compliance framework.

This makes front-loaded VAT compliance essential. Companies that deal with prepaid services or vouchers – such as e-commerce platforms, leisure service providers, or digital intermediaries – must have robust internal systems. Real-time VAT accounting, thorough documentation, and internal controls are not optional, but necessary for meeting compliance requirements.

Lastly, the alignment of Dutch jurisprudence with EU VAT law reinforces legal certainty. This harmony ensures that domestic practice stands on solid legal ground and reduces the risk of future regulatory disputes. For businesses, it offers the reassurance of operating within a VAT framework that is consistent with broader European fiscal policy.

Final Reflection

The 2025 ruling by the Dutch Supreme Court brings important guidance on the VAT treatment of non-redeemed services. It clearly establishes that VAT obligations arise not from the actual use of a service, but from the moment a right is granted in exchange for payment. This shift in focus – from consumption to entitlement – requires businesses to reflect this principle in their financial processes, tax compliance structures, and strategic decision-making.

In the context of a growing digital economy, the consistent application of VAT rules to prepaid and conditional services remains crucial. Companies offering vouchers or similar instruments must carefully assess how these are treated for VAT purposes, review the legal standing of any agreements with the tax authorities, and ensure their internal systems are designed to handle the associated compliance duties.

Ultimately, while the ruling offers legal clarity, it is up to businesses to act on it. Meeting these obligations requires not only awareness but also the proactive structuring of operations to ensure full and timely compliance.