Gift Cards - no VAT?

[Thomas K]

Hi Guys,

 

In Germany, the disclosure of VAT is prescribed by law! Currently, this is not mentioned at all in the purchase process of a gift-cards and corresponding settings I can't find. This should be provided. Or did I miss something?

Thanks in advance,

Thomas

[Rheddy]

VAT's on gift cards are a fickle thing. I don't know the particulars but this is what I found out by doing a simple search and clickign on some third party links:

https://www.gov.uk/vat-businesses/discounts-and-free-gifts

Additional information about VAT in Germany:

https://en.wikipedia.org/wiki/Taxation_in_Germany#Value-added_tax

You may have to inquire about Gift Cards VAT in Germany.

[MADMAN32395]

Idk EU law. But gift card is same as cash basically, and wouldn't be considered a product. Wouldn't make sense to tax twice for the same money. But the actual products the gift card is used on are taxed instead.

[Thomas K]

Thanks a lot. If we have one product, which the card is for, then we need VAT! So have to generate Cards for several products (for choice by user).

It would therefore very helpful to have the choice in the admin panel 

[Thomas K]

Hi Guys, Thomas again 

If we purchase products with an coupon-code, the VAT is calculated as shown:

Price net 49.00 EUR

discount 80% = -39.20

Sum net = 9.80 EUR (ok so far)

VAT (19%) = 9.31 (that's wrong!; it has to be 1,86)

TOTAL = 19.11 EUR (right is 11,66)

This matter should definitely be solved. And this is no matter of german law 

[MADMAN32395]

That doesn't make sense. What are they using the cards on? 

 

I have my gift cards setup as wildcard then they either use themselves or give the gift card to someone else to purchase subscription or other items.

[Thomas K]

14 hours ago, MADMAN32395 said:

That doesn't make sense. What are they using the cards on? 

 

I have my gift cards setup as wildcard then they either use themselves or give the gift card to someone else to purchase subscription or other items.

In such a case in Germany they have then to pay VAT. Therefore I had the Idea to give them Cards for certain products.

[Thomas K]

Nobody an idea?

[opentype]

Idea about what? If you think it’s a bug, open a ticket or make a bug report about it. If it’s a matter of a feature request (i.e. requesting certain settings about taxation) describe the options needed. 

As it was already said in that other topic of yours, these coupon/gift card taxations are tricky. In theory, your example above could also be correct, for example if that coupon was purchased in the same store without tax. 

[Rheddy]

I have to agree about gift cards as well. Here in the United States, you don't pay tax on gift cards because they aren't considered to be actual merchandise. We're only charged tax when we use that gift card to purchase an item. I suspect that it could be the same in Europe, at least, it should be. It wouldn't be sustainable if you had to pay VAT on the gift card and then also have to pay VAT when you use that gift card to purchase an item. It's called double dipping on taxes paid out for merchandise.

From what little I know about it, gift cards in the United States are 'tax-free' purchases. The only time you're going to pay taxes is when you use that gift card to purchase goods or services.This means that you only pay taxes when you redeem or use the gift card to purchase something. I've tried searching through Google about VAT on gift cards or gift vouchers and it seems that every website has a different interpretation about when VAT comes into play. Apparently, there is no universal rule on gift cards or vouchers in Europe, which might be why there is confusion about when it's to be paid. Some sites have reported that there is a movement to overhaul when VAT is applied since there's a possibility of being charged twice for VAT where it concerns gift cards/vouchers.

While some countries, like India, don't charge taxes on gift cards or vouchers (they only charge when you redeem that gift card or voucher for goods or services) there are other European countries that charge twice, or vice versa (on purchase of gift card or redemption of gift card or both).

[sudo]

8 hours ago, Thomas K said:

In such a case in Germany they have then to pay VAT. Therefore I had the Idea to give them Cards for certain products.

So if you buy a €20 gift card with 25% (business gets €15 after vat) then a person buys something costing €20 you then have to pay the VAT to Germany again losing another 25% value?

[opentype]

3 minutes ago, ZeroHour said:

So if you buy a €20 gift card with 25% (business gets €15 after vat) then a person buys something costing €20 you then have to pay the VAT to Germany again losing another 25% value?

No. But that’s why these things get so complicated. It just depends what the gift card/coupon is actually doing. 

[MADMAN32395]

58 minutes ago, opentype said:

No. But that’s why these things get so complicated. It just depends what the gift card/coupon is actually doing. 

(Tax) lawyer up?

[Rheddy]

I'm so glad that I don't buy gift cards from Europe. It sounds like the taxes surrounding gift cards is just as screwed up as the tax code in the United States. On the subject of VAT's for gift cards/vouchers, there should only be a single VAT charge for such items. Either gift cards are VAT or tax exempt in Europe or the redemption of such gift cards are exempt from VAT. VAT's shouldn't apply to the purchase of a gift card as well as the redemption of such gift cards. It's double taxation. Just because one person is purchasing the gift card and giving it someone else doesn't mean that VAT should be applied to each person involved with the gift card.

The way I see it, taxes or VAT's should only be applied when you use the gift card to purchase goods or services (i.e., redemption). It just doesn't make sense to charge both. Even the E.U.'s law regarding VAT's on gift cards is extremely vague as there is no specific law that addresses it. It only addresses the value of gifts.