New VAT Rules for Virtual Events

This was the case regardless of the business or non-business status of the customer. 

The rapid shift towards online streaming and other virtual events, driven by continuous technological developments, has prompted the European Commission to revisit VAT regulations. Starting 1 January 2025, new guidelines will be implemented to ensure a more integrated and streamlined VAT system for digital services and virtual events within the EU. 

New Measures

A virtual event is not defined in VAT law but could include live-streamed events or other online events that involve people interacting in a virtual environment, rather than meeting in a physical location. 

Live virtual events are no longer classified as electronically supplied services due to the necessity of human intervention. These events typically allow delegates to ask questions in real time, introducing a human element that precludes their classification as an electronically delivered service. Consequently, virtual events require distinct VAT treatment concerning the place of supply. 

Physical events, such as conferences and seminars, are taxable in the European Union (EU) Member State where the event takes place. However, live virtual events have been more challenging to navigate, as physical presence is separate from a specific EU member state. Establishing VAT treatment has proven difficult for local tax authorities and courts. 

Pre-recorded events can still qualify as an electronically supplied services and are subject to VAT in the country where the consumer resides under general VAT rules. 

However, the new rule applies to live virtual events streamed or made virtually available, with VAT treatment differing. Starting 1 January 2025, in line with Council Directive 2022/542, VAT on such events will be charged in the jurisdiction where the customer is located.

The new measures will be applied as follows:

• For business-to-business (B2B) supplies, the European Union business recipient will be required to self-charge VAT and then claim VAT via the reverse charge mechanism in their country, assuming the customer is eligible to claim back the VAT.
• For business-to-consumer (B2C) supplies, the supplier will be responsible for collecting and remitting VAT in the EU country where the customer is based. Therefore, this aligns the VAT treatment of such virtual events with similar services such as broadcasting, telecommunications and electronically supplied services.
  Therefore, for B2C transactions involving activities that are streamed or otherwise made virtually available, the place of supply will be where the customer is established. VAT treatment largely remains unchanged. However, the place of supply rule for in-person events does not apply to virtual events.  

Additionally, the EU-wide €10,000 threshold still applies for EU businesses, whilst a nil threshold applies for non-EU registered businesses. 

The revised VAT Guidelines on virtual events aims to align VAT application with the normal place of supply rules for B2B services, as well as rules for electronically supplied services in B2C transactions. 

How this will impact users of online events

The revised guidelines will have minimal impact on B2B transactions, as existing practices remain unchanged. In such case, suppliers will invoice their business clients without VAT, given the place of supply is shifted to the customer, whereas the customer will self-charge VAT and claim it, if eligible, via the reverse charge mechanism. 

The new measures impact the VAT treatment of B2C transactions, increasing compliance costs. Providers of these services may need to register and charge VAT in each EU country where their customers reside if their total sales exceed €10,000 annually across the EU Member States. 

Additionally, suppliers of virtual events will be required to identify the country of residence of their consumers, to understand the impact of being subject to VAT in another Member State. 

While the VAT One-Stop-Shop (OSS) simplifies VAT registration into a single EU-wide process, monitoring differing VAT rates across member states, along with pricing, contracting, and invoicing adjustments, will remain complex. 

The revised VAT guidelines mark a significant shift in the taxation of virtual events, especially for B2C transactions. Providers should proactively adapt to these changes by leveraging tools like the VAT OSS while staying vigilant about compliance requirements in different Member States. 

Conclusion

Navigating these changes requires a strategic approach, and our talented team is here to help! Whether you need further clarification on how these regulations impact your business or assistance with VAT registration, compliance, and reporting, we provide the expertise and support necessary to ensure a seamless transition. Reach out to us today to discuss how we can assist you in adapting to the evolving VAT landscape with confidence!