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Employee vouchers as part of a reward system

In the underlying case, a corporate group implemented a program to recognize and reward employees who had performed exceptionally well and made the most significant contributions. One form of such a reward was the free distribution of shopping vouchers.

The aim was to enhance employee performance and thereby contribute to greater profitability of the company. The VAT treatment of these employee vouchers under the reward system was disputed.

The European Court of Justice (ECJ) ruled that the free distribution of shopping vouchers to employees within this reward system constituted an incentive to improve employee performance and, therefore, contributed to the smooth operation and profitability of the business. As such, the provision of these services (distribution of vouchers) was not for non-business purposes, and no self-supply taxation (Eigenverbrauchsbesteuerung) is to be applied.

ECJ 17.11.2022, C-607/20

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