Businesses supplying Live Webinars or other Virtual Events need to be aware of new EU VAT rules, which came into effect from 1 January 2025.
The new rules may require businesses providing Virtual Events to register for VAT in the EU. There is also the risk of double taxation on the basis that the UK has not so far altered its rules in respect of similar services.
The EU has not specifically defined what qualifies as a ‘Virtual Event’, causing additional confusion.
What this means for those supplying Virtual Events
The UK and EU have always had similar VAT rules in respect of ‘Electronically Supplied Services’ or ESS.
ESS are those supplies which are automated and do not require human intervention from a supplier, such as an app or a download.
However, any supply which requires a degree of human intervention has previously been taxed under different rules.
Now the EU are seeking to bring the taxation of ‘Virtual Events’ in line with the treatment of ESS.
This is unlikely to be an issue where the recipient of a supply is a ‘Business’.
This is because in most cases if the customer is based in another country it will account for the VAT due as an accounting adjustment known as a ‘Reverse Charge’.
However, the rules may present a problem where the supply is to a ‘Consumer’ (i.e. an individual) rather than a ‘Business’.
The rules for ESS and now ‘Virtual Events’ (as far as the EU are concerned) is that the supply is deemed to take place where the ‘Consumer’ lives.
In theory this rule triggers a requirement for the supplying business to register for VAT in each EU Member State that its customers live in.
However, the EU does allow registration via its One Stop Shop so that businesses can escape registering in each Member State but still account for the VAT due in those countries.
The EU has not particularly defined what is meant by a ‘Virtual Event’ but appear to be applying the same logic as considering what an ‘Event’ is, as when considering the treatment of an “In-Person” cultural, artistic, sporting, scientific, entertainment or similar supply.
The EU has stated that they believe that live webinars, virtual conferences, and live streamed physical events would all qualify as a ‘Virtual Event’.
However, though the EU appear to suggest that training courses may qualify as a ‘Virtual Events’ there may be some scope in arguing that where education or other services are provided on an ongoing basis rather than on a specific date or as a series of dates that the supply is not an ‘Event’ as far as these rules are concerned.
It is also the case that the UK has not changed its policy. HMRC’s own guidance suggests that the supply of a ‘Live Webinar’ to a ‘Consumer’ falls to be taxed where the supplier is located meaning that UK VAT is chargeable.
There is now conflict between the UK and EU position with the result that there is potential for double taxation.
Further Action
Businesses that have a significant customer base in the EU will need to consider whether they are hosting ‘Virtual Events’.
Such businesses will also need to consider a way that they can identify and prove whether their customers are ‘Businesses’ or ‘Consumers’ from a VAT point of view. They will also have to consider how they want to address any potential double taxation issues. Our VAT Team can assist in respect of these matters and our membership of MGI Worldwide provides our clients with access to overseas advisors that can help with the One Stop Shop Registration.
Please contact us for more information.