Virtual Events and the Risk of Double Taxation

Luca Clivati
September 23, 2022

When organising a virtual event, it’s important to determine how this supply will be treated for VAT purposes.

We have previously discussed VAT rules and place of supply for virtual events, this blog will discuss the potential future changes to the VAT position for EU Member States.

Current VAT position for virtual events in Europe

For B2B delegates, the current rules mean that virtual admission is classified as a general rule service, meaning VAT is due where the customer is established.

For B2C delegates, the current rules depend on whether the virtual attendance can be considered an electronically delivered service or a general rule service. For electronically delivered services, the place of supply is where the customer normally resides and for other services, the place of supply is where the supplier is established.

In other words, online conferences and events with a host and delegates asking questions in real-time via live chat or similar have a human dimension that prevent this from being classified as an electronically delivered service which means that:

  • For B2B the place of supply is where the customer is established, and
  • For B2C the place of supply is where the host is established

Future position on virtual event VAT in Europe

The EU Council adopted Directive 2022/542 on 5 April 2022 declaring from 1 January 2025, the supply of a virtual event is taxable in the country where the consumer resides or is established (being a Directive, the relevant rules must be implemented by each EU Member State by 31 December 2024). The new rule will apply to all live-streamed activities.

The Italian tax authorities’ point of view

Italian tax authorities clarified in the ruling reply 409/2022 pubblicazione (agenziaentrate.gov.it), published on 4 August 2022, that the supply of training courses in ‘online’ mode are relevant for VAT purposes where the customer is established or resident, regardless of whether the customer is a taxable person or a private individual.

In the clarification to the taxpayer, Italian tax authorities referred to:

  • Working Paper 1013/2021 of the VAT Committee Circabc (europa.eu), which considers that, in the case of virtual activities/events falling under the discipline of the Article 54 of Directive 2006/112/EC, the place of supply of such activities should coincide with the place where the final consumer is established and uses the service, and
  • The changes made to Article 54 by the 2022/542, which stipulate that “where the services and ancillary services relate to activities which are streamed or otherwise made virtually available, the place of supply shall, however, be the place where the non-taxable person is established, has his permanent address or usually resides”

This means that the content of the VAT Directive 2022/542 seems to have already been implemented by the Italian tax authorities.

Therefore, the same supply could be subject to VAT in two different EU Member States.

How Sovos can help

Our team of tax experts can support you in understanding in which country your supply is subject to VAT in to ensure all compliance requirements are met, including registering for VAT purposes as a non-resident.

Take Action

Have more questions about VAT on events? Download our European Guide to understanding VAT obligations or get in touch with our tax experts.

Sign up for Email Updates

Stay up to date with the latest tax and compliance updates that may impact your business.

Author

Luca Clivati

Luca joined Sovos in 2022 and is a senior manager of the consulting team within Compliance Services. He holds a Master’s degree in International Economics and has 13+ years of experience on cross-border transactions and international VAT and GST. Luca specializes in tax consulting advisory focusing on indirect taxes, diagnosis, solution, development and implementation of clients’ tax requirements, VAT compliance and tax due diligences within the EU and in jurisdictions outside of it (mostly Norway, Switzerland, New Zealand, Australia and Singapore).
Share this post

North America ShipCompliant
February 22, 2024
Is Beverage Alcohol Self-Distribution the Next Big Thing?

A number of recent lawsuits filed by beverage alcohol producers have raised new interest in self-distribution rights, an often-overlooked area of the industry. Self-distribution is when a supplier of alcohol, such as an importer or domestic manufacturer, is authorized to sell directly to retailers without having to work with a wholesaler to get their products […]

February 20, 2024
Why the Market is Ready for the Sovos Compliance Cloud

The emergence of digital transformation fundamentally changed how many governments and tax authorities around the world handle modern tax and compliance. What is unique about this process is that each individual government operates under its own set of rules, and global businesses are expected to keep up. In their efforts to address compliance, ironically, many […]

North America Tax Information Reporting
February 16, 2024
ACA Reporting Deadlines and More for Tax Year 2023

Affordable Care Act (ACA) reporting has started for tax year 2023. ACA reporting can quickly become complicated and costly with IRS penalties if your business does not have an efficient process in place. Although regulations have generally stayed the same for this reporting season, there are some important updates all businesses should be aware of […]

North America Unclaimed Property
February 16, 2024
Consequences of Non-Compliance with Unclaimed Property Laws

Building and maintaining a program to ensure compliance with the ever-changing unclaimed property laws is challenging, costly and time consuming. As a result, many companies put off or delay coming into compliance or do not put enough resources into creating a robust program. Those delays, erratic reporting and even ignorance that unclaimed property laws exist […]

North America ShipCompliant
February 16, 2024
Most Popular Wine Varietals Shipped in 2023 and More

Last month, Sovos ShipCompliant and WineBusiness Analytics released the 2024 Direct-to-Consumer Wine Shipping Report, marking the fourteenth consecutive collaboration between the two companies. Alex Koral and Andrew Adams presented an overview of the data and analysis from the report, highlighting key trends and statistics. Here, we summarize some of the noteworthy findings starting with the […]