Switzerland: VAT treatment of vouchers (court decision)

A decision by the Federal Administrative Court changes the definition of a “voucher.”

According to prior Swiss value added tax (VAT) practice, a voucher qualified as means of payment for a service or certain goods, so the sale of the voucher was not deemed to be a transaction under Swiss VAT law. Thus the tax-relevant date (giving rise to tax liability) was the date the voucher was redeemed. At this point the supplier had to charge VAT at the applicable tax rate according to the general principles of the VAT law. In other words, the sale of vouchers was not to be categorized by the issuer (or seller) because this sale was out of scope of the Swiss VAT law and the tax-relevant date was in the future at the time of the voucher’s redemption.

In the instant case, a company organizing outdoor activities had been issuing vouchers in previous years. Some of these vouchers entitled the holder to access certain activities while other vouchers were issued for a specific amount of money.

The court decided that the vouchers issued for a specific amount of money did in effect fit the definition of a voucher, following the Swiss VAT practice. The vouchers issued for a specific activity were deemed to be payments in advance, suggesting that both the applicable VAT and the place of supply of the underlying goods or services were known at the time of issue. 

In its opinion, the court essentially stated that a distinction had to be made between a pure value voucher (Wertgutschein) and a service voucher (Leistungsgutschein).

In the situation of a value voucher, the value added tax is incurred only once it is redeemed, which is why value vouchers that have been sold but not yet redeemed (or expired) are not deemed to be a VAT-eligible transaction. On the other hand, service vouchers are to be qualified as advance payments, which is why the VAT is already due when the payment is received. Therefore, service vouchers that had been sold but not yet redeemed need to be included in the VAT statement. An important criterion of a service voucher is that it refers to a specifically determined service/goods that must be redeemed at a certain place and at a certain time.

Companies offering vouchers need to verify to which category their vouchers belong from a VAT perspective. The introduction of a VAT governance framework around vouchers is crucial because the time of declaration in the VAT returns must be precisely determined for each individual sale of vouchers to avoid any late declaration of VAT and assessment of default interest / penalties.

Read an October 2021 report prepared by the KPMG member firm in Switzerland