Comments on ECJ C-436/24 (Luko): Loyalty Points Not Free for VAT Purposes in Lyko Case (AG)

Loyalty points ≠ VAT vouchers: The article explains that loyalty points typically do not meet the legal definition of VAT vouchers under EU law, because they are not redeemable for specific goods or services without additional payment.
Points function as discounts: Instead of being treated as vouchers, loyalty points are generally considered a form of price reduction or promotional discount, which affects how VAT is calculated at the time of redemption.
Implications for businesses: Companies running loyalty programs must carefully assess the VAT treatment of points, especially in light of recent EU case law and evolving guidance, to ensure compliance and avoid misclassification.

Source MDDP

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No VAT exemption as currency: In-game gold is not considered a legal or contractually accepted payment method in real-world transactions, so it doesn’t qualify for VAT exemption under the “currency” provision of the EU VAT Directive.
Not a voucher under VAT law: The virtual currency doesn’t meet the criteria for a VAT voucher, as it’s already a consumable digital benefit and not a token for future goods or services.
Possible margin scheme application: AG Kokott suggests that in-game gold might qualify for the VAT margin scheme by analogy—if traded like second-hand goods on a secondary market and containing residual VAT—though this depends on specific conditions being met.

Loyalty Points Not Free for VAT Purposes in Lyko Case (AG)

Loyalty points are not “free” for VAT purposes: Advocate General Kokott argues that part of the purchase price should be allocated to the loyalty points, meaning they carry economic value and are not simply gifts.
Not classified as vouchers under EU VAT law: Because the points can only be redeemed alongside a future purchase, they don’t meet the criteria for VAT vouchers and are instead treated as discount mechanisms.
Potential shift from Dutch VAT policy: If the EU Court follows this opinion, it could overturn the current Dutch approach based on the Kuwait Petroleum case, possibly leading to higher or lower VAT depending on how loyalty programs are structured.