CJEU Advocate General: loyalty points not vouchers for VAT
17/09/25
On 11 September 2025, Advocate General Kokott (“A-G”) issued an opinion in the case of Skatteverket v Lyko Operations AB (C-436/24), a preliminary ruling request from Sweden. The central question of the referring court is whether the Lyko customer loyalty points qualify as VAT-relevant vouchers and if so, how to determine the VAT taxable amount. In this opinion, the A-G concludes that the loyalty points in question do not constitute vouchers . Instead, these points should be treated as a discount on a future purchase . It remains to be seen whether the Court of Justice of the European Union (“CJEU”) will follow this reasoning.
What does this mean for your organisation?
This case is particularly significant for the retail sector, where loyalty programmes are widely used as a tool to drive customer engagement and repeat purchases. The case deals with a rather specific scheme, in which customers are granted points upon purchase of a product (‘A’), which they can redeem for a free product (‘C’), if and when they make a second purchase (‘B’). According to the A-G, the VAT technical qualification depends on whether the customer can redeem the points independently for a product (C), rather than being required to make a second purchase (B) simultaneously with the redemption (C). The Voucher Directive clearly aims to distinguish vouchers from discount instruments and payment instruments. This opinion shows once again that the VAT treatment of customer loyalty schemes is not straightforward and should be reviewed on a case-by-case basis.
In the Dutch policy decree on the VAT treatment of vouchers, various types of loyalty instruments have been distinguished such as stamps, coupons, and discount vouchers. This policy decree also includes a section on free of charge vouchers. However, A-G Kokott argues the general presumption that no business gives anything away for free to third parties and that loyalty points are included in the prices of the products (either in advance or retrospectively). The notion that such points are ‘free of charge’ is unrealistic and does not correspond with the economic reality, according to the A-G.
It remains to be seen how the CJEU will approach this case. If it follows the A-G's opinion, this may have significant impact on loyalty schemes in practice. Anticipating this judgment, businesses should review their loyalty schemes from a VAT perspective. It is important to timely navigate the complexities and determine the VAT treatment, in order to review if immediate action, such as appealing against the (payment upon the) VAT return is useful.
Background
Lyko Operations AB, a Swedish retailer of hair care and beauty products, sought clarification on the VAT treatment of its planned customer loyalty programme. Under this programme, customers receive points with each purchase (‘A’), which can later be redeemed for goods (‘C’) from a “points shop” during a subsequent purchase (‘B’). The points are personal, non-transferable, and cannot be exchanged for or used in combination with money. The Swedish Revenue Law Commission ruled that these points do not constitute vouchers, as they lack a specific monetary value and are not purchased separately.
Both Lyko and the Swedish Tax Agency challenged this ruling, leading the Supreme Administrative Court of Sweden to refer questions to the CJEU regarding the VAT treatment of these loyalty points.
Preliminary questions
The Swedish Court referred two questions to the CJEU. The first question asks whether points awarded under Lyko’s customer loyalty programme constitute a voucher within the meaning of the VAT Directive.
The second question, which is only relevant if the first is answered in the affirmative, concerns how the taxable amount should be determined when such points are redeemed for goods.
Opinion of Advocate General Kokott
Addressing the first preliminary question, the A-G examined the definition of a “voucher” under Article 30a of the VAT Directive, as amended by the Voucher Directive. She emphasized that two cumulative conditions must be met for an instrument to qualify as a voucher:
- The goods or services, or their potential suppliers, must be indicated on the instrument or in related documentation.
- There must be an obligation to accept the instrument as consideration or part consideration for a supply.
While Lyko’s terms and conditions appeared to satisfy the first condition, Kokott concluded that the second condition was not met. She distinguished vouchers from discount instruments, which are explicitly excluded from the voucher definition by the preambles to the Voucher Directive. Discount instruments merely reduce the price when a customer makes a further purchase and act as an incentive for that subsequent supply. Conversely, a voucher must create a self-standing obligation for the supplier, triggered solely by the customer, to accept it as consideration. A key characteristic of a voucher is its independent usability by the holder as consideration, according to the A-G.
According to the A-G, Lyko’s loyalty points do not confer an independent right on the customer, nor do they create an obligation for Lyko to supply goods merely upon presentation. The fact that the points can only be used in connection with a future purchase, means that the points enable a more favourable additional purchase or a price reduction, rather than independently triggering a supply. Therefore, Lyko’s points constitute a discount instrument rather than a voucher in the opinion of the A-G.
The A-G also addressed the argument that a voucher must represent a specified monetary value at the time of issue. The A-G rejected this as an implicit condition that would unnecessarily restrict the scope of the Voucher definition. She asserted that points, acquired on the basis of the price of the first purchase, in fact have a monetary value that is "specifiable" rather than "specified" at the time of acquisition. The value becomes specified upon redemption based on the chosen reward, and the variability or initial uncertainty of this value upon issuance is irrelevant for VAT, as long as it can be expressed in monetary terms. Thus, a (multi-purpose) voucher can exist even when it refers to a reward whose value is determined only when the customer chooses it. However, she noted that even if points with a merely specifiable value qualify as multi-purpose vouchers, their VAT consequences would only arise upon redemption, when the value becomes specified, essentially aligning with the VAT treatment of a discount instrument.
Given her opinion that the points do not meet the definition of a voucher, the A-G saw no need to answer the second preliminary question regarding the calculation of the VAT taxable amount.
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