Giftcards and Taxes
Giftcards not only offer a powerful way to build customer loyalty and boost revenue – they also open up valuable tax planning opportunities for businesses. The right giftcard strategy creates liquidity benefits, deferred tax liabilities and additional revenue, which have a direct impact on financial stability.
FEATURE CLUSTER
Immediate liquidity – without immediate service provision
- When giftcards are sold, the money flows in immediately, whilst the service is provided later – or not at all.
- This gives companies an interest-free loan that they can use directly for investments, marketing or running costs.
- Unredeemed giftcards (‘breakage’) further increase revenue.
Tax benefits through single-purpose and multi-purpose giftcards
- Whilst VAT is payable immediately on regular sales, there are clear tax differences when it comes to giftcards:
- Single-purpose giftcards: VAT is payable upon sale.
- Multi-purpose giftcards: VAT is only payable upon redemption.
- Multi-purpose giftcards in particular create a significant liquidity advantage, as companies can pre-finance the amounts received tax-free.
Revenue optimisation through breakage & flexible redemption
- Higher revenue from unredeemed giftcards
- If giftcards are not redeemed, the full amount remains as revenue within the company.
- Multi-purpose giftcards also offer flexibility in redemption – ideal for hotels, restaurants, sports providers and e-commerce businesses that combine different tax rates.
Tax-efficient. Economically sound. Predictable in effect.
- Giftcards are a strategic financial tool: they increase liquidity, defer tax liabilities, provide planning certainty and boost revenue.
- With a professional giftcard infrastructure, these benefits can be harnessed effectively – across all sectors and without additional effort.
EXAMPLE CALCULATION
A hotel or sports club sells 1,000 giftcards at €100 each = €100,000 in immediate liquidity. As these are multi-purpose vouchers, VAT is only payable upon redemption. Unredeemed vouchers further increase revenue.
Take advantage of the tax benefits of a professional voucher system.
We’ll show you how to boost liquidity, defer tax liability and increase revenue.