In an advance ruling, The Swedish Council for Advance Tax Rulings (SRN) has stated that the provision of a pass or card entitling right to free entry to various attractions and to free utilization of transportation is to be seen to comprise the sale of a service and does not comprise the provision of a single or multiple use voucher.
This advance ruling applies at the point in time at which the tax liability arises on behalf of the provider of the tourist pass or card.
A company introduces a tourist pass providing the holder with the right of free entry to a number of attractions and with the right to, during this period, utilize the pass for an unlimited amount of transportation. The validity period of the card is 24, 48 or 72 hours, whereby the validity of the card begins when it is activated for the first time.
SRN determined that the card should not be treated as a single use voucher as the right to utilization, except for the limitation on period of validity, was not limited to a given occasion or to specific services known to the cardholder at point of sale of the card. SRN also determined that as the compensation for the card is the same regardless of its utilisation, the card is to be seen to comprise a type of discount card and, therefore, should not be treated as a multiple use voucher.
The company’s provision of the card is, therefore, to comprise a sale of a service taxed at point of sale.
The company’s provision of marketing services to the suppliers of the attractions and transportation are to be seen as separate, taxable services.
SRN’s advance ruling creates a certain degree of uncertainty in terms of the definition and handling of single use or multiple use vouchers.
We have previously reported on the new proposal regarding vouchers which is proposed to come into effect on 1 January 2019. A risk which is described in that article is that a greater number of types of vouchers will comprise single use vouchers according to the new definitions, whereby taxation will incur at an earlier point in time than is currently the case.
In the same manner, SRN’s view that a tourist pass or card is to comprise a service taxed at point of sale implies that an earlier point of taxation on behalf of the issuer of the pass or card. This is in contrast to a multiple use voucher which incurs taxation when it is first used. Companies issuing equivalent cards, and who treat these as multiple use vouchers, should review their handling of these cards in this context.
As the advance ruling from SRN has been appealed in the Supreme Administrative Court and SRN has based its assessment on a proposal for future legislation which is not, to date, implemented, we will continue to monitor developments in this area.