VAT Treatment of Loyalty Points in Lyko’s Scheme: Not Classified as Vouchers, Says AG Kokott

• Lyko Operations AB sold hair care and beauty products in stores and online.
• The company developed a loyalty program where customers earned points for purchases.
• Points could be redeemed for goods in a points shop with a subsequent purchase.
• Lyko sought clarification on VAT treatment of the program from the Swedish Revenue Law Commission.
• The case was referred to the Court of Justice of the European Union.
• Advocate General Kokott stated the points did not qualify as vouchers under EU VAT rules.
• A voucher requires identifiable goods/services and an obligation to accept it as payment.
• Lyko’s program met the first condition but not the second, as points acted as discounts.
• The AG dismissed arguments that points were gifts or free, as their value was in the initial purchase price.
• The CJEU’s decision on whether to follow the AG’s opinion is pending.

Source: taxscape.deloitte.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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