In this ruling, the CJEU clarified the VAT treatment of points-based loyalty schemes, and the distinction between multi-purpose vouchers (MPVs) and simple price reduction mechanisms. The case concerned a Swedish company operating a cosmetics distribution network, which had introduced a loyalty programme allowing customers to accumulate points on purchases and redeem them on future transactions with the same operator. The Swedish Tax Authority challenged the company’s characterisation of the points, taking the view that they did not qualify as MPVs under the VAT Directive but were simply a price reduction mechanism.
The Court was asked to rule on the VAT classification of these loyalty points under the voucher regime set out in the VAT Directive.p
The Court found that the points did not qualify as MPVs. They do not, in themselves, confer an autonomous right to receive goods or services. Their use is necessarily contingent on a subsequent taxable transaction taking place. They must therefore be treated as a mechanism for reducing the price of a future transaction.
