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 Tax Compliance
December 2, 2022
Four Pillars of a Strong Technology Match

There are many technology vendors out there promising you the world.  With a technology vendor partnership, those miracle solutions to all your business needs are available at your fingertips.  However, as with most things in life, it’s important to ensure you check off all the important boxes before making a purchasing decision. When you’re shopping […]

North America Tax Information Reporting
November 28, 2022
The Great Resignation to the ‘Great Confusion’ — What It Means for 1099s

The Great Resignation may technically be behind us, but the ripple effects are far from being complete. More than ever people are pursuing a side gig in addition to a job (full- or part-time). In some cases it’s out of economic necessity, while in others it can be for a lifestyle choice or based on […]

EMEA IPT
November 23, 2022
Fire Brigade Tax in Slovenia

Problems encountered with Fire Brigade Tax rate increase in Slovenia Slovenia’s Fire Brigade Tax (FBT) has changed. The rate increased from 5% to 9%. This came into effect on 1 October 2022. The first submission deadline followed on 15 November 2022. Unfortunately, the transition has been plagued by problems. We discuss some issues and how […]

E-Invoicing Compliance North America VAT & Fiscal Reporting
November 22, 2022
E-invoicing and Fiscal Digitization in Africa

African countries are following e-invoicing and continuous transaction control trends implemented rapidly by many countries around the globe. Each country in the continent is developing their variation of a tax digitization system. This means there is currently no standardisation with compliance requirements differing in each jurisdiction. A common transaction reporting feature among African countries is […]

North America ShipCompliant
November 17, 2022
How Can Direct-to-Consumer and Three-Tier Complement One Another?

Historically, the three-tier and direct-to-consumer (DtC) channels for beverage alcohol have operated independently, sometimes even viewing the other as competition. But in reality, there are many opportunities for a symbiotic relationship between these business units. For beverage alcohol producers that depend on both, a collaborative approach is imperative. DtC and three-tier—what’s the difference? First, some […]