VAT treatment of commercial loyalty programs


Binding tax ruling V0028-16, issued by the Spanish General Tax Directorate of June 24, 2016.

Within the framework of a loyalty program, a company aimed to marketing activities, provides promotional services to sponsor companies consisting to deliver free of charge to customers of the sponsoring entities a card from the loyalty program. When the customer purchases in corporate sponsors, earn points that are loaded on the card. Consumers, in exchange for these points, received from the consultant “rewards”.

The rewards can consist in goods acquired by the consultant to various suppliers, or services of travel (stays in hotels or flight tickets) acquired by the consultant to a travel agency that acts in its own name under the special regime for travel agencies (TOMS).

The consultant wants to be clarified about the tax treatment of the following questions:

1.   If the supply of the rewards to the affiliates to the loyalty program is considered as a transaction subject to the VAT and, in such a case, if it is possible for the consultant to deduct the VAT quotas paid in the acquisition of the rewards.

2.   For the cases the reward consist in travel services, in which is applicable the TOMS, determination of the tax base and, in case of opt for the application of the general VAT regime, to know if it is possible to deduct the input VAT paid.

Concerning the first question, this Directorate, based in previous consultations clarified by the same, as well as in jurisprudence of the ECJ, understands that the supply of rewards is a supply of goods subject to the VAT, with independence of the person who pays the price of these transactions, that in these cases is not the customer but the sponsor companies.

The tax base of these supplies of goods or services is the cost of acquisition of the same by the consultant.

Concerning the deductibility, the consultant entity shall be allowed to deduct the VAT quotas paid in the acquisition of the rewards in the terms mentioned in the Title VIII of the Spanish VAT Law.

Concerning the second question, according to article 141 of the Spanish VAT Law, when the rewards consist in the provision of travel services (flight tickets and/or accommodation services), in principle will be of application the TOMS since it would be of a unique service main of accommodation or transport, or a service of transportation and/or accommodation provided jointly with other accessory services of these.

Being the tax base of this travel service the difference between the total amount invoiced by the consultant and the amount of the acquisitions of services paid by the consultant for the realization of the travel.

As mentioned on article 147 of the Spanish VAT Law and detailed in article 52 of the Spanish VAT Regulations, the tax payers may opt by not applying TOMS but applying the general VAT regime, considering each transaction independently, with regard to the services provided to recipients that are entrepreneurs or professional with right to the deduct its input VAT.

Although under the TOMS, the travel agencies may not deduct the VAT paid on purchases that made for the completion of the journey, are done for the traveller benefit. However, in case of opting for the general VAT regime, in the time in that is produced the accrual of the supply of services included in a travel service, it is produced the birth of the right to the deduction of VAT quotas paid in the acquisition of services to others entrepreneurs that have been used for the provision of the referred travel services.

Click here if you want more information about our VAT services or you can contact us at

cv 24 06 16

Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt
Logotipo de Diligens Tax ConsultingLogotipo de Diligens Tax Consulting