Comments on ECJ C-436/24 (Lyko): Court Rules Loyalty Points Do Not Qualify as Vouchers

Loyalty Program Overview: Lyko Operations, a retailer of beauty and hair care products, planned to introduce a loyalty program where customers earn points based on their purchase volume. These points, redeemable for low-value items, can only be used when making a new purchase and represent a value of 2% to 10% of the initial purchase.
Tax Dispute: A dispute arose between Lyko Operations and the Swedish tax authority regarding the VAT treatment of the loyalty program. Lyko argued that the points should be classified as a “voucher for multiple use” under Article 30 bis of the VAT Directive, which would imply a zero valuation upon redemption, while the tax authority contended they merely offer an additional product selection without qualifying as a voucher.
Court’s Ruling: The Court ruled that loyalty points do not constitute a “voucher” as defined in the VAT Directive. It determined that for something to be classified as a voucher, the supplier must be obligated to accept it as partial payment for a supply, a condition not met in this case, as the points only grant the right to receive a reward upon making a new purchase.