Due to the COVID-19 pandemic, event organizers have had to adapt very quickly to avoid huge financial loss. Many events and conferences that were scheduled to be in-person were hosted online, and they have now become known as virtual events. Now, as the virus seems to be receding, it’s all about hybrid events, which combine in-person attendance with a virtual audience.
Virtual events allow remote participants to access live meetings from their computers, wherever they are based around the globe. Hosted entirely over the internet, they usually include live interactive sessions during which participants have the opportunity to ask questions, play games with each other, watch videos, etc. Meanwhile, in-person events include the notion of physical presence of participants and the opportunity to participate in an activity, such as a course, conference, or a seminar for instance.
VAT of Virtual Events
From a Value Added Tax perspective, the place of supply of a virtual event has to be looked at carefully. Let’s note that the place of supply determines the place of taxation and thus the applicable VAT. Currently, in-person events are covered by a particular provision for admission to events of the EU VAT Directive which states that the place of supply is the place where the event takes place. It is very easy to apply: once the geographical location of the event is known, the place of taxation is also known.
With virtual events, the place of supply is moving from a “special rule for admission to events” to a “general place of supply rules for services” and to “another particular provision”. In other words, the place of supply is no longer the place where the event takes place but will depend on whether the customer is a business or an individual. Or whether the virtual event can be considered as a digital service, ie an electronically supplied service.
Place of supply of virtual events under the general provision
When the customer is a business (B2B), the place of supply is where the customer belongs. Service supplies under reverse charge mechanism, and no VAT is charged by the supplier to the customer (unless the supplier and the customer are established in the same country).
When the customer is a non-business customer (B2C) the place of supply of virtual events is where the supplier is based.
Place of supply of virtual events considered as a digital service – special provision
Digital services are defined by the EU VAT legislation as “services which are delivered over the Internet or an electronic network, the nature of which renders their supply essentially automated, involving minimal human intervention, and impossible to ensure in the absence of information technology”. The place of supply of those services is the place where the customer is established, has its permanent address, or usually resides.
For B2B customers, the place of supply does not change whether for digital services or virtual events.
However, for B2C customers, there is a difference. This means that, if a virtual event can be considered as a digital service (an electronically supplied service), the place of taxation will be the country where the customers are based. The supplier must communicate the location of its customer and charge the correct VAT rate.
In most cases, virtual events cannot be considered as a digital service. Indeed, virtual attendance usually means a certain degree of interactivity: participants ask questions, engage with each other or the host in real-time. There is, in that regard, a significant part of human intervention in virtual events and this human dimension does not fit with the concept of digital services as defined by the EU VAT legislation. In short, this means that for B2B the place of supply is where the customer is based and for B2C the place of supply is where the supplier is based.
New amendment of the directive in 2025: New place of supply rules for virtual events
An amendment of the Council of the European Union will change the place of the supply for virtual events. In accordance with the amended Directive, the new place of supply for virtual events will always be the place where the customer is based, has his/her permanent address, or usually resides.
The main idea behind this new place of supply for virtual events is to ensure taxation in the Member State of consumption for all services that can be supplied by electronic means.
The definition of the concept of “electronically supplied services” will need to be revised in order to be wider. The new place of supply rules applies to virtual events but also to all live-streamed activities.
The amended directive will expressly state that the rule applicable to in-person events does not apply to events “where the attendance is virtual”. This is now clear that the main place of supply for B2B services applies for virtual events (general rule /article 44 of the EU VAT Directive).
Let’s note that under this new Directive, there is also a possibility for Member States to apply a reduced rate for live-streamed activities.
The new measures shall be effective as from January 1, 2025. Member States are required to adopt and publish the required laws, regulations, and administrative provisions by 31 December 2024.