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V2307-17 12 September 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sistema de fidelización

Customer loyalty schemes classified as promotional services subject to 21% VAT

An airline has requested a ruling on the VAT treatment of a mileage accumulation and redemption system. The DGT has determined that the management of these miles constitutes a promotional service subject to the standard rate, and that the redemption process acts as a discount on the original sale.

The question raised

Treatment of the operations carried out by the applicant for the purposes of Value Added Tax.

The DGT's ruling

The issuance and redemption of miles constitute promotional services subject to VAT at 21%. The redemption of miles for goods or services is not a discount on the sale of the redemption, but rather a consideration paid by a third party (the issuing entity) to the entity performing the redemption. The entities that issued the miles may reduce their taxable base in the original sale by the redemption value of the miles, provided they have received effective reimbursement.

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