The Court of Justice of the European Union has given its judgment that:
“the common system of value added tax must be interpreted as meaning that a supply of services consisting, for a business, in offering retail vouchers to its employees, in the context of a programme set up by that business, designed to recognise and reward the most deserving and high-performing employees, does not fall within its scope”.
The reward of vouchers was “intended to increase the performance of its employees” and therefore lead to “the proper functioning and profitability of the business”.
The principle of fiscal neutrality was not infringed because the retailers would account for VAT when redeeming the vouchers.
Directive 2006/112/EC – Article 26(1)(b)