• Service: Tax, Global Indirect Tax
  • Type: Regulatory update
  • Date: 6/16/2014

Netherlands - No VAT exemption for discount cards 

June 16:  The Court of Justice of the European Union (CJEU) on 12 June 2014 issued a judgment concluding that discount cards sold to consumers, in order to provide for price reductions, did not fall within the scope of “securities” or “other negotiable instruments” for the purposes of the exemption from value added tax (VAT).

The CJEU concluded:

  • Upon acceptance of a discount card, retailers only need to remit VAT on the amount received from consumers for the supplied goods and services.
  • While the discount cards provide for price reductions, they do not constitute a payment instrument for the purposes of the VAT Directive. Unlike payments, transfers, and cheques, the discount cards do not lead to a transfer of money.

The referring Dutch court will have to decide how to settle this matter now that the VAT exemption no longer applies. Based on the view of the Dutch Ministry of Finance, the sale of the discount card (i.e., other than a gift voucher) would be subject to VAT.

Read a June 2014 report prepared by the KPMG member firm in the Netherlands: VAT exemption does not apply discount cards

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