Gift cards are a popular way for businesses to enhance customer loyalty and generate additional revenue. However, from an accounting perspective, it is essential to record them correctly. Below, we explain how to properly account for gift cards in Accountable, depending on the type of gift card.
When a gift card is issued for products or services subject to a single VAT rate, the sale can be recorded immediately. The appropriate VAT rate is applied since the applicable rate is already known at the time of sale.
Accounting treatment:
The sale of the gift card is immediately recorded as a regular sale with the applicable VAT.
When the customer redeems the gift card, no further accounting action is required, as the revenue has already been recorded.
Example: A gift card for a massage treatment with 21% VAT is sold. In this case, the sale is recorded immediately with 21% VAT, and no additional entry is made when the gift card is redeemed.
Example: A store sells only products with a VAT rate of 21%. In this case, the sale is recorded directly with 21% VAT, and no additional entry is made when the voucher is redeemed.Boek direct de verkoop van de cadeaubon met het juiste BTW-tarief.
Record the sale of the gift card immediately with the correct VAT rate.
When a gift card can be redeemed for products or services with different VAT rates, the situation is different. Since the applicable VAT rate is only known at the time of redemption, the sale of the gift card itself is not recorded immediately. Instead, the transaction is recorded only when the customer uses the gift card.
Accounting treatment:
No entry is made when the gift card is sold.
Revenue and VAT are only recorded when the gift card is redeemed for specific products or services.
Example: A gift card can be used for both books (6% VAT) and music albums (21% VAT). Since it is not known in advance which product the customer will choose, the sale of the gift card is not recorded. Only when the customer redeems the gift card (e.g., for a book) is the sale recorded with 6% VAT.
Record the sale of the products or services upon redemption of the gift card, not at the time of the gift card sale.
Author - Valesca Wilms
As content marketing lead at Accountable Belgium, Valesca writes about freelancing, self-employment, and taxes based on her own experience as a freelancer.
Who is Valesca ?Thank you for your feedback!
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