Analysis: “Clarifying the VAT treatment of city cards” (Case C-637/20, Skatteverket v DSAB Destination Stockholm AB) by Heidi Suorsa and Sam van der Vlugt
In its ruling in Skatteverket v DSAB Destination Stockholm AB (C-637/20), the Court of Justice has provided clarity on the VAT treatment of city cards within the meaning of Directive 2006/112/EC (VAT Directive). The case is the product of a debate on the definition of a ‘voucher’ under Article 30a of the VAT Directive, and more specifically whether city cards fall within that definition. The city card in question gives access to various sights, tours and museums as well as transportation services such as buses and boats in the city of Stockholm, Sweden, which are subject to VAT rates ranging from 6% to 25% or are exempt from VAT. The suppliers of the services receive a certain percentage of the normal cost of that service from DSAB when cardholders use the card with them. The question referred to the Court of Justice reads: ‘Must Article 30(a) of the VAT Directive be interpreted as meaning that, a card such as the one at issue in the main proceedings, which gives the cardholder the right to receive various services at a given place for a limited period of time and up to a certain value constitutes a voucher and, in such circumstances, constitutes a multi-purpose voucher?’
Article 30a(1) of the VAT Directive provides that a ‘voucher’ is an instrument with an obligation to accept it as consideration or part consideration for a supply of goods or services, when 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. These vouchers can take the form of single-purpose or multi-purpose vouchers, whereby the former is defined as a voucher where the place of supply of the goods or services to which the voucher relates, and the VAT due on those goods or services, are known at the time of issue of the voucher. The latter is defined as a voucher ‘other than a single-purpose voucher’. The distinction between the two is relevant given that the taxable amount in case of the former equals the consideration paid for the relevant goods or services since the VAT due is per definition known, whereas the taxable amount in case of the former equals the consideration paid for the multi-purpose voucher.
On the one hand, Skatteverket maintains that the city cards do not meet the requirements of a voucher, as due to the limited validity thereof, the cardholder cannot make use of all the services on offer. On the other hand, DSAB holds that the card is a multi-purpose voucher due to the fact that the card is perceived as consideration for goods and services. Furthermore, the customer upon purchasing the card knows the services and the providers of these services. Because services can be purchased with the card to which different VAT rates apply, the amount of VAT payable by the company issuing these cards is not known at the moment of purchase of the card by the consumer.
In its judgment, the Court of Justice concurs with the Opinion of the Advocate General and DSAB, the issuer of the city cards. The Court holds that a city card may constitute a voucher on the grounds that the cardholder can use multiple services at different places for a limited amount of time, regardless of the fact that due to the limited validity thereof it is not feasible to use all the services on offer within the designated time. Furthermore, since the services to which the cards give access are subject to different VAT rates, and because it is not known in advance which services the cardholder will use, the exact amount of VAT due is not known. The voucher, therefore, does not qualify as a single-purpose voucher, rendering it a multi-purpose voucher.
The ruling constitutes a significant step in the process of defining the concept of a voucher. Whereas the Commission noted the existence of different views among Member States on the VAT treatment of city cards already in 2019, no consensus could be reached during the legislative process on the main elements that must be an essential part of a city card in order for it to qualify as a voucher under the VAT Directive, resulting in the failure to include city cards in Directive 2016/1065 (the Voucher Directive). Hence, it was left to the Court of resolve this deadlock, possibly to the detriment of the Member States which may lose out on tax revenue generated from VAT on tourist attractions: as a result of this judgment, after the purchase of a multi-purpose voucher, subsequent transactions with multi-purpose vouchers as consideration are no longer subject to VAT. Nonetheless, city cards are not multi-purpose vouchers by default unless the relevant criteria have all been met.
Heidi Suorsa is a PhD researcher at the University of Antwerp.
Sam van der Vlugt is a joint-PhD researcher at the University of Salerno and the University of Antwerp.