TaxCorporate TaxECJ in phone card VAT ruling

ECJ in phone card VAT ruling

The European Court of Justice rule that VAT is payable on vouchers at the wholesale stage of sale, but not when the end customer makes a purchase

THE EUROPEAN COURT OF JUSTICE has made a key ruling on when value added tax (VAT) is chargeable on telephone cards and vouchers.

The case was between mobile phone network Lebara and HMRC, with the ECJ finding that VAT should be paid when telecommunications service operators sell phone cards to their distributors, but not again when the customer purchases it.

The ruling has significant consequences for e-retailers and voucher businesses – such as Groupon – as well as any other shops selling vouchers.

The case will affect all vouchers and other coupons that hold a face value entitling the customer to acquire goods or services. Given that the case found  HMRC’s interpretation of the voucher rules was incorrect, a change of law or practice will follow which may have wide-ranging consequences for all businesses providing vouchers.

It will also make it crucial for distribution contracts to be made abundantly clear.

Related Articles

'Innocent' companies will be hit by tough HMRC anti-fraud powers

Corporate Tax 'Innocent' companies will be hit by tough HMRC anti-fraud powers

1y Stephanie Wix, Writer
Building company director banned for 7 years for VAT under-declaration

Corporate Tax Building company director banned for 7 years for VAT under-declaration

1y Richard Crump, Writer
Berkshire motor business VAT fraudsters sentenced

Corporate Tax Berkshire motor business VAT fraudsters sentenced

1y Richard Crump, Writer
The growth and challenges of digital sales taxes globally

Corporate Tax The growth and challenges of digital sales taxes globally

1y Editorial comment
CIoT urges government to rethink VAT approach to online traders

Corporate Tax CIoT urges government to rethink VAT approach to online traders

1y Richard Crump, Writer
UK votes to leave EU – accountancy profession reacts

Accounting Firms UK votes to leave EU – accountancy profession reacts

1y Fraser Simpson, Reporter
HMRC calls for extra time in Spot the Ball legal battle

Corporate Tax HMRC calls for extra time in Spot the Ball legal battle

2y Fraser Simpson, Reporter
Bishop Fleming launches new cloud accounting product

Accounting Firms Bishop Fleming launches new cloud accounting product

2y Richard Crump, Writer