The European Commission proposal on the VAT treatment of vouchers : a Maltese perspective

Abstract

The legislaton gap on the VAT treatment of vouchers at EU level led Member States to develop their own heterogenous solutions. In an effort to overcome the resulting mismatches, the EC published the Proposal with the objective of clarifying and harmonising the VAT treatment of vouchers. This study considers the present VAT practices in selected Member States to better reveal the discrepancies that exist. It further seeks to identify the current VAT treatment in the local scenario and the impact of the proposed rules on Maltese businesses. Finally, recommendations are put forward on aspects which require redress for the EC's ultimate goals to be attained. The objectives of the study were achieved through an in-depth analysis of EC documentation and a series of semi-structured interviews with the relevant stakeholders, which allowed the study to encompass an industry, technical as well as regulatory perspective on the subject. The study analyses in detail the proposed changes to the VAT Directive and identifies issues that are hitherto considered to be unresolved. In addition, the study ascertains that the current VAT treatment as adopted by local businesses is consistent in the majority of the cases and coincides with the theoretical approach as advanced by VAT practioners and the regulator. In turn, current practices proved to be by and large in consonance with the envisaged VAT treatment pursuant to the Proposal. The study concludes that the area of the VAT treatment of vouchers does not particularly represent a complex labyrinth for local businesses, VAT practioners and the regulator. Furthermore, the Proposal is not expected to significantly impact on current practices. The proposed rules are considered as a major step in the right direction; however, they a The EC is urged to address the identified unresolved issues in order to preserve the spirit and aim of EU VAT law, that is, a clear and harmonised VAT treatment across the EU. The enormous growth in the use of vouchers has inevitably shifted the attention to the rules applicable to their VAT treatment. This dissertation provides a detailed and comprehensive overview of the topic to allow the profession to be well versed with this somewhat novel reality.