Loyalty Points Are Not Always Vouchers: What the CJEU Judgment C-436/24 Means for VAT

According to a recent judgment of the Court of Justice of the European Union (CJEU), loyalty points do not necessarily qualify as vouchers under VAT legislation.

In case C-436/24, Skatteverket v. Lyko Operations AB, the CJEU examined the VAT treatment of a loyalty program. Specifically, the Court assessed whether points awarded to customers for purchases, which can later be redeemed for goods, should be considered a voucher under the EU VAT Directive.

For VAT purposes, a voucher is defined as an instrument that must be accepted as consideration for the supply of goods or services. A typical example would be a gift card or voucher that a customer presents at checkout and the supplier is obliged to accept instead of cash.

From a VAT perspective, it is crucial to determine whether a given instrument qualifies as a voucher, as this affects when VAT liability arises. In some cases, if the underlying goods or services are not specified at the time of issuance, VAT is only accounted for upon redemption.

In the case at hand, the Swedish company Lyko operated a loyalty program in which customers earned loyalty points from purchases. These points could later be used to obtain bonus goods. The Swedish Supreme Administrative Court referred the matter to the CJEU to clarify whether such points fall within the voucher rules under the VAT Directive.

The CJEU concluded that, in this case, the loyalty points did not constitute a voucher for VAT purposes. The key factor was that the points did not create an obligation for the supplier to accept them as consideration for goods or services. In other words, they were not a substitute for money. Instead, they merely granted customers the possibility to receive certain bonus goods במסגרת the loyalty program.

This judgment confirms that customer benefits and loyalty schemes cannot automatically be treated as vouchers from a VAT perspective. The decisive criterion is whether the instrument represents a right that can be used as consideration for the supply of goods or services.

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