Virtual Meetings and Events are inevitable in today’s world. Using technology, we can bring together people from all parts of the world for business discussions, training, product promotions, and many more. Such virtual events also trigger VAT and in the ensuing paragraphs, we shall discuss a major change that the European Union has put in place in relation to such events.
Determining the taxability of events in which the participants were physically present was much simpler. The taxability of virtual events is a lot trickier, given that the participants are based out of different places.
The EU has however confirmed that beginning from January 1, 2025, charges for live-streamed virtual events would be taxable in the country in which the consumer is domiciled. It is pertinent to note that virtual events which typically need human intervention and work on a real time basis have to be distinguished from electronically supplied services, which can even be pre-recorded streaming.
To summarize,
- For events where the participants physically attend (B2B or B2C), the Place of Supply of the service is the country where the event takes place.
- For Live Events where the attendance is virtual and the customer is B2B, the place of supply is the location of the attendee.
- The most vital change relates to Real Time Events for B2C attendees who are located in a different EU state. Hitherto, the Place of Supply for such transactions was the host’s country. Now, it is the attendee’s country. As such, the providers of virtual events (hosts) would now have to register and charge VAT in up to 27 EU Member States if they render services to B2C (VAT unregistered) customers. Nevertheless, reduced rates for certain events, if applicable to the scenario, can be adopted.
As mentioned earlier, the third rule above and the related change in place of supply would apply only if it were a real-time event and the attendees can participate, ask questions where applicable, and interact with the host/ co-joiners on a real-time basis.
As such, the organizers would need to determine and maybe justify to the VAT authorities that it is not a mere electronic service that they are rendering but a live event. Moreover, if the event is hybrid, having both physical and virtual attendees, appropriate due diligence needs to be carried out.
It is pertinent to note that the above change applies within the EU, leaving some ambiguity on non-EU businesses/ attendees who are involved in such events. Based on the laws of those countries, there could be the problem of double taxation to be reckoned with. Moreover, EU member states may also have different VAT rates which need to be tracked and factored into the invoicing process resulting in more burdens for in-house tax departments. Validating the VAT IDs of the customers to determine if they are B2B or B2C is another daunting task. There might also be a need to register under the OSS schemes, based on the status of the customer.
Reference Material
https://www.vatcalc.com/eu/vat-changes-on-virtual-events-january-2025/
https://www.fonoa.com/blog/decoding-the-new-eu-place-of-supply-rules-for-live-virtual-events
https://simplyvat.com/eu-rules-for-vat-on-virtual-events/
https://vatit.com/blog/new-vat-treatment-for-virtual-events/
