EU VAT case law
When a consumer purchases goods, they earn points. Later, they can exchange those points for other goods. But only if they purchase something else. In such a situation, those points do not constitute a voucher for VAT purposes.
Judgment of the CJEU, 5.03.2026, C-436/24, Lyko Operations.
Background
- Lyko Operations is a Swedish company. It sells cosmetics to consumers.
- It plans to introduce a loyalty program. Its rules are as follows.
- When a consumer buys cosmetics, he receives points.
- The points can be redeemed for other items (from a specific area called “points shop”). These items are subject to different VAT rates (regular or reduced).
- The points can be redeemed only if the consumer buys something in the store (when he buys other goods in the store). He cannot use only the points to buy the goods.
- When a consumer decides to make a further purchase, he receives items from “points shop” equivalent to the value of 2-10% of the value of the goods purchased.
- Points cannot be purchased, cannot be exchanged for cash, are assigned to a specific person, cannot be transferred, and expire after 2 years.
Question
Are these points multi purpose vouchers for VAT purposes?
Legal provisions
In accordance with Article 30a.1 of the Directive:
- ‘voucher’ means an instrument where there is an obligation to accept it as consideration or part consideration for a supply of goods or services and where the goods or services to be supplied or the identities of their potential suppliers are either indicated on the instrument itself or in related documentation, including the terms and conditions of use of such instrument;
According to recital 4 of Directive 2016/1065 (VAT Directive on vouchers):
- Only vouchers which can be used for redemption against goods or services should be targeted by these rules. However, instruments entitling the holder to a discount upon purchase of goods or services but carrying no right to receive such goods or services should not be targeted by these rules.
The Court’s reasoning