City cards are specialised cards purchased by individuals mostly to gain access to tourist attractions or to use public/private transportation within a specific geographical area. These cards were the subject of discussion by the VAT Committee concerning their treatment for VAT purposes.
Whereas the VAT Committee's primary role is to offer general guidance on how VAT rules should be applied across the European Union (EU), it can also discuss specific cases.
Indeed, the discussion on city cards was mainly triggered by the decision of the Court of Justice of the EU (CJEU) in the case C-637/20 (DSAB Destination Stockholm). In this case, the Court held that an instrument that gives the bearer thereof the right to benefit from various services at a given place, for a limited period and up to a certain amount, may constitute a ‘voucher’, even if, on account of the limited validity period of that instrument, an average consumer may not be able to benefit from all the services offered. That instrument can also constitute a ‘multi-purpose voucher’ when the VAT on those services is not known at the time of issuance of that instrument.
The VAT Committee discussed the VAT implications of two similar but not identical city cards:
City card 1, offers attractions and transportation for a set duration or up to a certain value, ceasing when the (duration or value) limit is reached; and
City card 2, operates within a fixed timeframe from the first use, with no value limit, acting as full payment.
The main discussion revolves around whether city cards can qualify as vouchers for VAT purposes. The CJEU addressed this matter in the DSAB Destination Stockholm case, defining a card as a voucher if it is used as either full or partial payment for goods/services and specifying the offering and provider.
Single- or multi-purpose voucher?
In the event that a city card is deemed to constitute a voucher for VAT purposes, the next step is to determine whether the city card should be treated as a single-purpose voucher (SPV) or a multi-purpose voucher (MPV). An SPV covers known goods/services and their associated VAT at issuance, while an MPV allows access to services with varying VAT rates or exemptions. It is important to note that city cards will not inherently be MPVs. If all services under the card share the same VAT rate and are not tax-exempt, it could still be an SPV.
In cases where city cards are deemed to constitute MPVs, the VAT treatment at the time of issue of the card and the treatment on the redemption of such card would be different from those of an SPV. In the case of MPVs, VAT should be chargeable when goods/services are redeemed using the card. EU Directive 2006/112/EC (“the VAT Directive”) stipulates that the taxable amount should typically be the value of the MPV less the applicable VAT for the provided/redeemed goods/services.
While it obviously serves to clarify the VAT treatment of city cards, it is not possible to take the ruling in the DSAB Destination Stockholm case to mean that all city cards are automatically vouchers given the variety of such cards. For a particular city card to qualify as a voucher, it will still have to meet the cumulative conditions for this to be the conclusion. This needs to be analysed on a case-by-case basis depending on the conditions of the city card.
The parts of a whole?
There are also additional considerations to be made when the city card is used as part consideration only. It entails that the taxable amount for each such supply cannot be based on the full consideration paid for the city card. Rather, it would have to equal only part of that consideration. Not knowing what the total use will be made of the city card, it is difficult to see how the supplier of an individual service should be able to determine what his part of the consideration actually amounts to in monetary terms. It is in fact dependent upon the overall number of services the cardholder will have enjoyed within the set time limit - and the supplier may not have access to this information.
In this case, the VAT Committee indicated that in the absence of sufficient information (to be able to apportion the consideration between the various services supplied in respect of the city card), Article 73a of the VAT Directive stipulates that the taxable amount should instead be based on the monetary value indicated on the MPV itself or in the related documentation.
The VAT considerations on city cards or similar may be complex and may require a thorough analysis in order to be able to identify the correct VAT treatment and taxable value, which may vary on a case-by-case basis depending on the contracting arrangements.
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