Payments from unredeemed gift cards

Date of publication
25 Aug 2022 13:51

Date of delivered judgment/ order/ decision/ control signal
24 May 2022 13:34

Authority
National Tax Court

The case concerned whether payments from unredeemed gift cards for multiple purposes were subject to VAT. The National Tax Court found that it was a matter of delivery of a product or service for consideration when the company’s customers bought a gift card for several purposes. It was taken into account that the company had made a delivery of a gift card for which the customers had paid a fixed fee. This was not changed by the fact that the customers subsequently did not redeem the gift cards. This fact was only relevant for when the VAT liability came into effect. In accordance with current national practice on the entry of VAT liability for the sale of gift vouchers for multiple purposes, the VAT obligation first entered into force at the time the gift voucher was redeemed. In the present case, where the gift card was not redeemed within the validity period of 3 years, the VAT liability came into effect at the time where, after the expiration of the validity period of 3 years, the company recognized the consideration for the gift card as income. Considering that, according to the information, the company largely sold gift cards for goods and services subject to VAT, the National Tax Court found that the sales tax should be specifically calculated based on the full amount of all gift cards for multiple purposes that had not been redeemed. The National Tax Court therefore upheld SKAT’s decision (dissent).

Source: skat.dk

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