The sale of vouchers for catering services and VAT taxation part 2

Service-Tax

Food service providers are trying new solutions to attract customers. Of course, the quality of the food is usually of the greatest importance. However, this is not always enough due to the difficulty of reaching customers from other cities. In the above situation, it may be a good idea to sell vouchers that can be used by the buyer or given to someone as a gift.

Sale of vouchers for unspecified services and the emergence of a VAT obligation

The taxpayer runs a hotel where, apart from room rental services, he also provides catering and spa services. The offer also includes comprehensive services, such as a weekend with meals and a spa. In order to increase the sales level, the taxpayer started selling vouchers for private persons and companies. The offered vouchers have a different price and validity period. At the time of selling the vouchers, the taxpayer does not have any information about the date and type of services that the customer will use. Often times, the sale of a voucher takes place on a completely different date than its implementation (purchase of services by the customer). The price of the voucher includes the remuneration for the services covered by the voucher. The taxpayer wonders when the tax obligation will arise in this situation.

In the above circumstances, despite charging for the voucher sold remuneration for services that at the moment are unspecified and will be performed in the future, the moment the voucher is sold, it will not be subject to VAT. The taxpayer does not know what circumstances will arise in the future in connection with the choice of the service by the customer at the time of voucher redemption.

At the moment when the customer redeems the voucher and orders a specific service, its performance will result in the obligation to tax it in VAT due to the fact that the customer, choosing the service and paying with the voucher, gives the seller the necessary information to tax the VAT service provided (and to issue invoices, receipts). ).

When analyzing a given situation, it is worth referring to Art. 19a paragraph. 8 of the VAT Act, which stipulates that if the service provider receives some or all of it before the service is provided, then it is obliged to tax the received advance payment with VAT.

However, the advance payment received should relate to a specific service to be performed in the future by the service provider for the customer. Thus, when the seller receives an advance payment and cannot assign it to the future performance, then the VAT obligation will not arise. In the jurisprudence line, art. 19a paragraph. 8 of the VAT Act is treated as a special provision that applies only to the occurrence of strictly defined circumstances, such as receipt of an advance payment, prepayment before the performance of the service, which must be specified as to the subject of the service, remuneration, tax rate.

Sale of vouchers for specific services and the emergence of a VAT obligation

The taxpayer runs a hotel facility which offers catering services, room rental, spa and wellness. In addition to the basic offer, the taxpayer sells comprehensive services. The taxpayer additionally sells vouchers both for natural persons not conducting business activity and for companies. Vouchers have an assigned expiry date and come in different values. After the expiry of the period indicated on the voucher, it becomes invalid, which results in the impossibility of its implementation. The taxpayer has vouchers assigned to specific services, e.g. a two-day stay for a couple with breakfast and dinner + spa. However, despite assigning specific services to the voucher, the taxpayer has no control over the time at which it will be used.

When selling a voucher, the taxpayer receives remuneration for the services covered by the voucher. The collected remuneration is not refundable even if the voucher has expired. Sale of vouchers, the taxpayer of the document with a receipt or invoice with the amount of the advance payment taken before the service is performed with the VAT rate appropriate for a given service (vouchers are assigned to specific service packages). The taxpayer has doubts whether he is acting correctly and if the voucher is not used by the customer (the service is not provided by the taxpayer), the seller should correct the output VAT?

In these circumstances, the taxpayer, when selling vouchers, collects remuneration for future services. This means that the date of the service performance is unknown on the date of sale of the voucher. On the other hand, in the case of selling a voucher, the taxpayer knows the subject of the service, and thus also the correct VAT rate. Due to the value of the voucher in accordance with the price of the service, the value of the remuneration due to the taxpayer for its performance is also known.

The above means that the taxpayer is able to determine what kind of service will be provided in the future, because the vouchers are intended for specific types of services. This makes the taxpayer know what kind of service he will perform in the future.

Therefore, the VAT obligation will arise at the moment of selling the vouchers, because the taxpayer knows at this point what type of service the remuneration will be charged in advance for, because at the moment the Company knows exactly what service will be provided.

Pursuant to Art. 29a paragraph. 10 point 3 of the VAT Act, the taxpayer has the right to reduce the tax base before the sale is made for the whole or part of the payment returned to the buyer, if the sale did not take place.

On the other hand, if the voucher is not used by the customer in part or in full, there will be no basis for adjusting the VAT due by the taxpayer, because in this situation the customer will not refund the entire advance or its part. When the customer purchases a voucher, he is informed about its expiry date. It is the customer who decides whether to use the voucher or not, so he makes an informed decision to cancel the service in whole or in part. Because in this case the advance payment will not be reimbursed, so there will be no conditions for reducing the tax base.