The rise of virtual events has transformed how businesses and individuals connect with global audiences. Accelerated by the COVID-19 pandemic, organizations quickly shifted their events online, opening up new possibilities for outreach and engagement. Virtual events now span a wide range of formats, including webinars, online lectures, virtual conferences, digital exhibitions, and live-streamed physical events. These events provide diverse experiences, from passive viewing of pre-recorded content to real-time participation in live sessions.
Starting January 1, 2025, the European Union (EU) will introduce major changes to its Value Added Tax (VAT) rules for virtual events and live-streamed activities. The new regulations aim to bring the VAT treatment of virtual events in line with digital services. Under these changes, VAT will be applied based on the location of the customer, rather than the event host’s country of residence. Some EU member states have already incorporated these regulations into their domestic laws.
Is a virtual event a digital service?
The alignment of VAT rules for virtual events with those for digital services suggests that virtual events are not automatically considered digital services. EU VAT legislation defines digital services, or “electronically supplied services,” as those delivered via the internet or electronic networks, where the service is mostly automated with minimal human intervention. Notably, the level of human involvement is assessed only from the supplier’s perspective.
For example, a pre-recorded webinar may qualify as a digital service if there is no interaction between participants and presenters. However, interactive virtual activities, such as live webinars or virtual conferences that require significant human involvement, do not fall under the category of digital services.
Are all online gatherings considered events?
There is a common misconception that every online gathering automatically qualifies as an event and is subject to the new VAT rules. However, there is a distinction between “virtual events” and other activities, such as online training.
Unfortunately, EU VAT law does not clearly define what constitutes an “event,” leaving room for potential legal challenges. This issue was addressed by the Court of Justice of the European Union (CJEU) in the Srf konsulterna case (C-647/17). In this case, a Swedish company offered accounting and management courses held at conference centers over several days. The question was whether these courses qualified as “admission to events” for VAT purposes.
The Swedish tax authorities argued that “admission to events” referred strictly to the right to enter a venue, which didn’t apply to the courses. The CJEU disagreed, ruling that admission to a course includes both the right to enter and the right to participate. Furthermore, the Court found that requirements such as advance registration or payment had no bearing on whether an activity qualifies as an event.
The Advocate General (AG) provided additional clarification, suggesting that an “event” refers to an indivisible activity, planned in advance, that occurs at a specific place and time and revolves around a defined subject matter. Three key factors determine whether an activity qualifies as an event:
- Short Duration: Events typically last from a few hours to a few days. By contrast, longer-term activities like university courses, which span weeks or months, are less likely to qualify as events.
- Uninterrupted Activity: If a course runs over several consecutive days, it is more likely to be considered an event. A brief break in the schedule does not automatically disqualify it as such. In contrast, courses spread over several weeks with multiple breaks are less likely to be classified as events, falling instead under the category of training activities.
- Planning: Events are typically planned in advance, with a predefined agenda and specific subject matter. This distinguishes them from more open-ended activities that may offer a general framework for education.
While the CJEU decision clarified some aspects of what constitutes an event, several questions remain unanswered. For instance, how long can an activity last and still be considered an event? Can a course tailored to a customer’s needs still qualify as an event? These issues prompted the VAT Committee to provide further guidance.
The VAT Committee clarified that an event is more limited in scope than an ongoing activity. An event is time-bound, usually lasting from a few hours to about seven consecutive days, and lacks continuity. The payment method—whether a subscription, periodic fee, or ticket—does not affect whether an activity qualifies as an event. Additionally, knowing the identities of all participants in advance or adapting the course content to meet the customer’s needs does not disqualify the activity from being classified as an event.
Based on this guidance, we can conclude that ongoing online training, such as weekly language classes held over several months, would not qualify as an event and would instead fall under the general VAT rules. However, a virtual workshop specifically designed for the employees of a particular company and tailored to their needs may still qualify as an event.
New VAT rules for virtual events
Starting January 1, 2025, new VAT rules will apply to virtual events, requiring that VAT be due in the country where the customer is located. This aligns with the destination principle, which ensures that tax is paid in the customer’s country of residence.
For business-to-consumer (B2C) transactions, event organizers must charge VAT according to the rate in the consumer’s member state. Organizers will need to be aware of the applicable VAT rates in each country. Importantly, as the EU VAT rate reform also takes effect in January 2025, member states will be allowed to apply reduced VAT rates to virtual events if those same rates would apply to in-person attendance. Events that will be eligible for the reduced rates include entry to shows, theaters, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, sporting events, exhibitions, and similar cultural events. While event organizers will have to charge VAT based on the customer’s location, they won’t need to register for VAT in every country where their customers reside. Instead, they can use the One Stop Shop (OSS) system to handle VAT collection for all virtual events across the EU.
In business-to-business (B2B) transactions, VAT will not be charged at the point of sale but rather through the reverse charge mechanism, which is consistent with the treatment of other B2B services.
Practical considerations
The new VAT rules clarify the tax treatment of virtual events by aligning them with digital services. As the popularity of virtual events increases, this clear tax framework will benefit both event organizers and participants across the EU.
However, some businesses may face added administrative tasks, as they will need to charge VAT based on the customer’s location. This requires accurately identifying where customers are located, possibly by using IP addresses and other digital tools. Companies must also either use the OSS or register for VAT in multiple EU countries to ensure proper tax payment. For example, a business based in the UK or the US that offers live online workshops to EU customers will now need to register for VAT in the EU, as the place of supply is considered to be where the customer resides. Additionally, the EU does not offer a VAT registration threshold for businesses that are not based within the EU, meaning even small-scale activities require registration.
The opinions expressed in this article are those of the author and do not necessarily reflect the views of any organizations with which the author is affiliated.
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