New VAT place of supply rules on virtual events for non-taxable persons

What are the new rules as of 1 January 2025?

The received wisdom to date has been that the provision of virtual events (e.g. a seminar, conference or other event) often follow the main place of supply rules for the provision of B2B and B2C services in the EU, which have been applicable since 1 January 2010.

In brief, these rules entailed that where the recipient of the services is a taxable person the VAT is charged in their place of establishment (almost always with a liability shift via the reverse charge mechanism). Where the recipient is a private consumer (i.e. a non-taxable person) VAT would be charged based on the place where the provider of the services is located.

Alternatively, the specific place of supply rules for so-called electronically supplied (broadcast and telecommunication) services might be applicable. However, application of these rules is often not possible or otherwise uncertain, due to the strict conditions that need to be met on a case-by-case basis.

From 1 January 2025, the place of supply provisions for certain B2C virtual events will be overhauled and clarified. Specifically for cultural, artistic, scientific, educational, entertainment or similar activities, VAT will be due in the Member State where the consumer is located. These rules are then more in line with the rules on electronically supplied services and show the general trend of the European Commission increasingly focusing on the consumption principle and ensuring VAT is levied as close to the actual consumption as possible: also in our new digital age.

What are the potential consequences for your business?

The first and most obvious consequence is that where your business provides a virtual event for consideration and you have EU attendees who are located outside of your own jurisdiction, then local VAT will need to be charged on the fee charged to the EU customers (B2C). This can naturally lead to an increased administrative burden: your company might need to make use of the one-stop-shop or even register in other Member States for VAT purposes and remit said VAT to the local tax authorities.

Furthermore, this can lead to a further administrative burden whereby the location of the customer will have to be determined. Factors such as IP addresses and other digital indicators might have to be collected to ensure proper charging of VAT. Registration forms including tax questions could be used, though eager local tax authorities could take opposing views based on other data points and request remittance.