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Reward cards represent, as research show, one of the most popular form of rewards granted within loyalty and sales-supporting programs. These rewards are attractive both to the participants and the organisers. Why?
Personalised, immediately available, flexible, do not require storing, always within a reach for the organiser. These are the features characteristic of the prepaid reward cards. The advantages of the cards are countless, both from the organisers and participants’ perspective. However, frequently, prior to deciding to launch a loyalty program or at a further stage – when selecting the reward – questions arise in the minds of the organisers as to the profitability of investing in such activities. However, also in this case, reward cards appear to be a very appealing offer in view of the savings they generate.
Promotional items distributed free-of-charge during various marketing campaigns are subject to VAT. Pursuant to the Act of 11th March 2004 on VAT, the tax applies generally to transactions relating to goods and services. However, both electronic and paper reward vouchers represent neither a provision of a service nor goods, thus, they are not subject to this tax. It means that using reward cards may bring you savings in terms of promotional campaign budget at the level of 23%.
VAT is not the only financial burden that you have to take into account. It is also worth keeping in mind the income tax applied to the winners of loyalty programs, such as, inter alia, competitions and bonus sales, which must be collected from them by the organiser. If you do not want to discourage the participants, it is worth remembering about the rates which are exempted from the tax and offer such rewards which will be also beneficial to the participants in this regard.
Pursuant to Art. 21(1)(6a)(68) and (68a) of the Act of 26th July 1991 on personal income tax (consolidated text in Journal of Laws of 2018, item 200, as amended) – the PIT Act – a natural person is exempt from income tax if he/she receives free-of-charge such items as, inter alia:
In the above-mentioned cases, the benefit provider (organiser) does not have the obligation to collect the tax and submit the PIT-8C or PIT-8AR declaration.