Changes to EU place of supply rules for virtual events as of January 2025

 Posted by: Geoffroy Charmes

  15 November 2024

Changes to EU place of supply rules for virtual events as of January 2025

From 1st January 2025, live virtual events will be taxable in the jurisdiction where the participants are established, bringing the VAT treatment in line with digital services.

Background

Due to the digitalisation of the economy, accelerated by the pandemic, many events are now more of a hybrid nature i.e. the event takes place both physically and virtually.  Under the current rules, this brought a lot of uncertainty and complexity as to where to tax these events. Whilst the current rules for admission on an onsite event are subject to VAT in the Member State in which the event takes place, the rules in regards the place of supply to a virtual event are less clear.

This new legislation aims to tackle the current lack of clarity.

New place of supply rules for virtual events from 1st January 2025

When the participants are B2B customers, the place of supply will be where the customer is established. As such, the supplier will not be obliged to charge VAT to its business customer when both are established in different Member States; the customer should account for VAT under the reverse charge.  Local VAT will be due if the supplier and customer are established in the same EU Member State.

When the participants are B2C customers, the place of supply will be where the non-taxable person is established. This means that the supplier is obliged to charge the appliable VAT in the customers Member State of establishment, with the possibility to declare this VAT via the One Stop Shop (‘OSS’) return, rather than VAT registering throughout the EU and declaring same via local VAT returns.

Member States have until 1st January 2025 to implement this change, and many have already done so.

New reduced VAT rate

The updated legislation will also allow Member States to apply a reduced VAT rate to the admission of virtual event when live streamed.

Impact for businesses who organise online events

Businesses organising this type of event shall need to assess the VAT implication of this change and will need to differentiate between B2B and B2C attendees, in order to apply the correct VAT treatment.

For physical events, the place of taxation will still be where the event takes place, whereas for the virtual element, the new VAT rules described above would apply. For a hybrid event, both elements must be considered.

Furthermore, it will also mean that companies will need to investigate if a reduced VAT rate applies to the admission, if the event would attract that same rate for a physical event.

If you have any questions on the impact of the above changes on your business, please contact us.

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