VAT treatment of unredeemed vouchers

On 8 April 2025, the Tax Department issued Circular 3/2025, clarifying the VAT treatment of vouchers bearing an expiration date that remain unredeemed.

According to the Circular, such vouchers are subject to the following VAT treatment:

A) Multi-Purpose Vouchers

As defined in Circular 235, VAT on multi-purpose vouchers is accounted for at the point of redemption. Therefore, if such vouchers are not redeemed by their expiration date, they are not regarded as linked to any supply of goods or services. As a result, no VAT is due in respect of these vouchers.

B) Single-Purpose Vouchers

Also defined under Circular 235, VAT on single-purpose vouchers is accounted for at the point of their issuance. In cases where these vouchers are not redeemed by their expiration date, no VAT adjustment is required for the VAT already accounted for at issuance.

Should you require further clarifications concerning the above, please contact our trusted advisors in the Indirect Tax Department at KPMG Cyprus.

KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations.

Our tax professionals are able to review your company’s current tax position and provide relevant advice and planning on a range of green initiatives, indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.