In a 2024 customer survey, around 50% of women and more than 40% of men in Germany indicated that they had previously given someone a voucher as a gift. Around one in five respondents had also previously given someone a voucher for meals out, wellness products, beauty treatments, events, theater tickets, or books. This shows how popular vouchers are in Germany.

While companies can profit from this popularity, they need to be extra vigilant with taxes. Many companies that issue or redeem vouchers find it difficult to determine when value-added tax (VAT) is due.

In this article, we explain what a voucher is, including the differences between single-purpose and multipurpose vouchers and what the law says about VAT. We also explain how to correctly post vouchers to your accounts, process refunds, handle expired vouchers, and make tax adjustments, as well as outline some bookkeeping challenges.

What’s in this article?

• What is a voucher?
  
• What are the differences between single-purpose and multipurpose vouchers?
  
• When is VAT due for vouchers?
  
• How are vouchers handled in accounting?
  
• Practical challenges of vouchers
  
• Key concerns with refunds, expired vouchers, and tax adjustments
  

What is a voucher?

According to the German VAT Act (UStG), a voucher is an instrument used to pay for goods, services, or other supplies. Businesses can issue vouchers and accept them as full or partial payment. That means a voucher replaces payment in cash, either partially or in full.

The business must make it clear how the voucher can be used, its terms of use, and which locations accept it. Companies can provide this information on the voucher itself or in accompanying documentation. Instruments that provide discounts do not qualify as vouchers, according to the UStG. For example, this includes discount, loyalty, and rewards cards.

Benefits of vouchers for businesses

Vouchers offer several upsides for businesses. They can strengthen customer loyalty and encourage repeat purchases because customers can only redeem them with the issuing company. Companies also benefit from advance payments, as customers frequently pay for vouchers prior to the actual delivery of the goods or services. In addition, unredeemed vouchers represent additional revenue for businesses.

Vouchers are also highly effective marketing tools. Businesses can employ them to attract new customers and increase turnover or as part of sales and marketing campaigns. Because vouchers are flexible, companies can issue them for individual products, services, or service areas. This allows the business to control how customers use vouchers. If the voucher is not limited to a specific delivery or service, companies give recipients greater choice when redeeming it.

Vouchers are generally popular with customers and are regularly given as gifts. Businesses can use this fact to further increase their reach and to raise brand awareness.

What are the differences between single-purpose and multipurpose vouchers?

Businesses looking to offer vouchers to customers in Germany can choose from one of two types: single-purpose vouchers (Einzweckgutscheinen) and multipurpose vouchers (Mehrzweckgutscheinen). Both types fulfill the basic requirements of a voucher. The main difference is how they are spent.

Single-purpose voucher

With a single-purpose voucher, the business makes it clear at the time of issue what specific goods or services the voucher covers. The company clearly defines what goods or services customers will receive with the voucher. A single-purpose voucher often refers to a specific product, service, or service category. This means it is transparent to customers from the outset what they can redeem the voucher for.

Examples of single-purpose vouchers include the following:

• A hair salon issues a voucher for a specific treatment or haircut.
  
• A restaurant issues a voucher for a brunch buffet for two.
  

Multipurpose voucher

A multipurpose voucher offers greater flexibility than its single-purpose counterpart. Companies do not stipulate what this type of voucher can be spent on when issuing it. Instead, customers can use these vouchers for different products or services the company offers. Thus, this voucher serves as a general means of payment within the company’s range of products and services, without being tied to a specific product or service.

Examples of multipurpose vouchers include the following:

• A department store issues a voucher for a fixed amount that customers can redeem for any products or services the company offers.
  
• A bookstore issues a voucher that customers can redeem for any books, calendars, or stationery items.
  

When is VAT due for vouchers?

The type of voucher is key to determining when VAT is due.

VAT on single-purpose vouchers

Single-purpose vouchers are issued for a specific product or service. This means businesses know from the outset what product or service they will render and what tax rate will apply. Therefore, they are required to remit VAT when they issue the voucher. This tax is due regardless of when the customer redeems the voucher and is not levied again when the voucher is redeemed.

If the VAT details have not been finalized when the voucher is issued (i.e., the place of performance or VAT rate are not yet known), this voucher is considered a multipurpose voucher, sometimes also known as a “mixed-use” voucher.

VAT on multipurpose vouchers

Multipurpose vouchers are not issued for a specific good or service. This means the business issuing the voucher cannot define the tax rate ahead of time. Therefore, VAT becomes due when the voucher is redeemed. At that point, the business knows what good or service has been rendered and which tax rate applies. In practice, these vouchers are typically issued with a receipt that does not include VAT.

The amount of VAT is calculated based on the value of the product or service. For a voucher with a face value of €100, VAT is payable on the full amount of €100. This also applies if the voucher is sold at a discounted price. For example, a voucher worth €100 might be sold for €80 via an online platform.

How are vouchers handled in accounting?

Vouchers can present a bookkeeping challenge for German businesses. They generate revenue as soon as they are issued, but the product or service generating this revenue is delivered later. Therefore, companies need to draw a clear distinction between when the voucher should be recorded as revenue and how it will be taxed. Accurate bookkeeping is important for indicating VAT correctly and for keeping an accurate overview of finances.

Posting single-purpose vouchers

Companies already know what goods or services will be rendered at a later time when issuing single-purpose vouchers. They should initially record the sale of the voucher as a liability. VAT is due immediately and is posted accordingly. The corresponding revenue is not posted to the regular revenue account until the voucher is redeemed, while tax was accounted for when the voucher was issued.

Here’s an example: A hair salon sells a voucher for a haircut for €50. In its accounting records, the company initially records the amount as a liability to the customer. The company pays the sales tax immediately. When the customer redeems the haircut, the company transfers the amount to the regular revenue account.

Posting multipurpose vouchers

With multipurpose vouchers, businesses initially record the sale as a debit entry or voucher liability because they do not know what specific goods or services they will render or what tax rate will apply. VAT is only due once the voucher is redeemed. This approach ensures accounting is correct and reflects the tax actually due.

Here’s an example: A department store sells a voucher worth €100 that can be redeemed for various products. Accounts post this amount as a voucher liability for as long as the voucher goes unredeemed. The business only calculates VAT and posts the revenue to its regular revenue account when the customer redeems the voucher.

Practical challenges of vouchers

While there are upsides to offering customers vouchers, businesses in Germany also have to contend with a number of challenges related to taxes and bookkeeping. Handling VAT correctly can be particularly complex in some cases.

Combining different tax rates

One aspect that should be handled with care is customers using vouchers for goods and services that are subject to different rates of VAT. For example, a customer uses a massage parlor voucher to purchase a massage and wellness products. The wellness products are subject to the regular rate of 19%, while the massage has the discounted rate of 7%.

In this case, businesses have to split the value of the voucher accordingly, calculating the VAT due on each and according to the respective rates. The only time tax can be calculated according to the tax rate of the main purchase is when one of the purchases is considered ancillary. This means it is subordinate to the main purchase (e.g., minor transport costs or supplementary services).

Using multimerchant vouchers

If a voucher is redeemable at multiple businesses, then VAT is collected along the service chain. For example, an event organizer sells an experience package that includes two concert tickets and dinner at a restaurant.

For the dinner, the event organizer first purchases a voucher from the restaurant. The restaurant taxes the value of this voucher as soon as it is sold. The event organizer then taxes the total value of the package when selling it to the customer and deducts the input VAT from the restaurant voucher. If the event organizer is acting purely as an intermediary on a commission basis and issues the restaurant voucher in the business’s name, then both businesses become liable for VAT when the voucher is sold. The businesses must coordinate to avoid errors.

Handling unredeemed vouchers

Not every voucher gets redeemed. The recipient might have forgotten about it or might not want to redeem it. The tax implications of this differ depending on the type of voucher.

Single-purpose vouchers require VAT at the time of sale. The tax payment cannot be reversed or refunded, even if the voucher is not redeemed at a later time.

Since multipurpose vouchers don’t require VAT until they are redeemed, zero tax is due if the voucher goes unused. For businesses, this means unredeemed multipurpose vouchers do not trigger tax expenses. However, they remain in the accounts as liabilities until they are written off.

Using digital solutions

Vouchers can be tricky to manage for lots of companies because they involve many different processes—from recording sales and calculating VAT to customer redemption. Digital solutions can help make these processes structured and efficient.

Stripe Billing helps businesses manage vouchers in a variety of ways, whether you sell vouchers online or offer them in-store. With Billing, you can quickly and easily create legally compliant invoices—for the vouchers and for the goods and services the vouchers apply to. In addition, you can use Billing to manage voucher sales and redemptions. This gives you an overview of outstanding vouchers, amounts already redeemed, and resulting sales. This simplifies accounting and supports compliance with tax regulations.

Key concerns with refunds, expired vouchers, and tax adjustments

Businesses in Germany should be prepared to handle vouchers once they’ve issued them. Here are some key concerns to keep in mind regarding refunds, expired vouchers, and VAT adjustments.

Refunds

There are many reasons why a customer might return a voucher or ask for a refund on the balance purchased. This might happen if the business can no longer redeem the voucher. A customer might want to return a voucher within the return period.

If the voucher is a single-purpose voucher—for which VAT was remitted when the voucher was sold—the corresponding tax return must be corrected. Businesses must correct the VAT and refund the corresponding portion of tax that has already been remitted. With multipurpose vouchers, there is no need to correct tax returns because they don’t require VAT until they are redeemed.

Expired vouchers

Companies should define clear rules for the validity of vouchers. Multipurpose vouchers are especially impacted if they expire without being redeemed. This is because VAT is only payable upon redemption, so the value remains untaxed. The accounting department can write off the liability after expiration. In the case of single-purpose vouchers, there is no change to the tax already paid. An expired voucher does not lead to a refund of sales tax.

VAT adjustments

Statutory tax rates for products and services can change in the period between sales and redemptions of vouchers. In such cases, companies must check if a VAT adjustment is necessary. In principle, the tax rate valid at the time of performance applies. With forward planning and the right digital tools, companies can handle these special cases.