New Rules on B2C Online Events and Checklist

As reported in our previous article, starting 1 January 2025 new rules are now in force requiring VAT at the local country rate to be charged on fees for attending online events where the customer is a consumer that resides in the EU. If that wasn’t enough there might be some additional bad news as UK VAT legislation has not been amended to bring it in line with the EU legislation.  Therefore, there is a risk that UK VAT might be due in addition to local EU VAT.

The new rules

In a series of articles published in 2024 (see here and here) we looked at how the rule around virtual events have evolved over the past couple of years. To summarise:

Most of the VAT legislation around events was drafted on the assumption that the event would take place in person. In such cases VAT from the country where the event effectively took place was charged.

When the pandemic started, in-person events were no longer possible, so the events industry turned to the power of the Internet and started shifting to virtual events. At the time there were no specific exceptional VAT rules for virtual events so they defaulted to the ‘general’ place of supply VAT rules for services.  These were broader in scope and for B2C supplies, tended to favour charging VAT in the country of the supplier rather than the consumer.

In trying to adapt to the shift in how the events industry operates and also maintaining OECD principles of taxing supplies based on where they are consumed, the European Commission decided to amend the VAT rules and introduced a new rule specifically designed for virtual events, although other types of supplies may also be impacted, such as distance learning.  This rule states that VAT in the country of the consumer should be charged instead of where the supplier is established.

This new rule started applying from 1 January 2025.

How does it impact event hosts?

The first thing event hosts should ask themselves is whether the supplies they make fall under the new rules. Essentially, if a separate fee is charged for attending online a live event, then it is likely the supply will fall under the new rules and the place of supply will be where the customer is established. If the customer is not in business and is established in the EU, VAT from the consumer’s country will have to be charged. Thankfully, individual registrations in each EU country where consumers are based are no longer required and taxable persons can opt to apply for a One Stop Shop (OSS) registration to account for VAT on virtual events for all EU countries under a single VAT registration.

If the customer is not from an EU country there might still be a need to register in the country of the client, since many countries have similar rules to the EU. This should be checked on a country by country basis.

There are of course cases where a separate fee is not charged and online access to the event is offered along with in-person admission for a single fee, or sometimes even free of charge. Most business will treat this as a single supply of services and account for VAT on the ‘main’ or ‘underlying’ supply – usually one of in-person admission and subject to VAT in the country where the event is held (and not where the consumer resides).  Bundled services have always been a contentious matter and tax authorities often challenge these arrangements. We recommend reviewing such arrangements along with the T&Cs, otherwise there is a risk the tax authorities might take a different view to that of the business.

It is also worth considering whether free of charge passes are in fact free of charge or, instead, the fee for the online event is paid (or supplemented) elsewhere. The VAT treatment can be very different in these cases. For example, we often see arrangements where members of an association pay a membership fee and receive, among other benefits, free of charge passes to events organised by the association, including for virtual events. There is therefore a question of whether the admission is free of charge or if remuneration for the admission is actually charged as part of the membership fee.  We have seen tax authorities treating this as ‘hidden income’ and levying VAT on the value of the attendance fee (sometime arbitrarily).

It is crucial to review this setup to ensure the correct VAT treatment is being applied and the event host does not create unnecessary VAT risks for itself.

There are also other practical issues around the new rule, such as whether a client is in business or not (i.e. whether this is a B2B or B2C supply). It is not unusual for companies to pay for their employees to attend an event, however this is not always a straightforward arrangement. Sometimes the company will arrange everything and the event host will raise an invoice directly to the company, which will also usually have a VAT registration in its country of establishment. In other cases, the employee will make the necessary arrangements themselves and recover the costs from the employer. Therefore, what might seem like a business-to-business transaction could in fact be a business to consumer supply of services, as the employee might act on their own and only later try to expense the costs. While this would not make much of a difference to the delegate attending the event virtually, the VAT treatment will be very different.

Being provided with a valid VAT number becomes crucial to determine whether a service is being provided to another business or a consumer client and therefore whether any VAT should be charged or not.

What about the VAT rates?

Event hosts will need to make sure they are charging the correct rate of VAT, especially since they will need to use the VAT rate in the country of the consumer client. Having up to date information on the applicable rates will therefore be key to ensuring the correct amount of VAT is reported.

On a related note, the European Commission also allows EU Member States to apply a reduced rate on streaming certain types of events, including exhibitions and cultural events. Applying the standard rate where a reduced rate is available means overcharging the client and paying more VAT than needed to the tax authorities. We recommend reviewing whether any reduced rates are available to ensure the correct amount of VAT is charged.

Is it live or recorded?

The new rule mentioned above will apply to events streamed live. VAT rules distinguish between events that are streamed live and those that are recorded and made available for viewing electronically. Recorded sessions can include recordings of events from the past, recordings of current sessions that can be watched after the event has taken place either online or downloaded for offline viewing or prerecorded content.

The recorded content is likely to fall under the category of electronically supplied services, although there are a few variables at play which may change this classification. As usual, a case by case review is required in order to determine the exact nature of the service being provided.

If giving access to recorded content is considered an electronically supplied service then these services will also require VAT from the country of the consumer client to be charged and an OSS registration if the host wants to avoid having to register in each EU Member State where the consumer resides.

If both live and recorded content have to be reported in the same way then should you pay attention to their correct classification? Unfortunately, yes, as some of the more technical VAT rules may apply differently to them. For example, while live streams may benefit from a reduced rate (as mentioned above), prerecorded sessions will usually be standard rated.

Things can get quite complicated in some cases as these different rules may interact in unexpected ways. For example, if an event benefits from a reduced rate for in person admission fees, it is likely a reduced rate will also apply to fees for streaming that event live. However, if the delegate is given the ability to download or access recordings of the virtual event, that supply will be standard rated. If these services are offered as packages, then determining the applicable VAT rate may become more complicated.

Double taxation

Finally, there is a very unpleasant discussion to be had around double taxation. For context, most of the VAT rules in the UK are still aligned with the EU ones given that the UK had been a member for a long time. However this new rule introduced by the EU is not aligned with the legislation in the UK.

Under UK rules, live streaming the same event to consumer clients would require UK VAT to be charged as the place of supply will be seen as the place where the supplier is established (i.e. the UK). Historically, this has been the position taken by tax authorities both in the UK and the EU.

However, as mentioned, from 1 January 2025 VAT rules in the EU indicate that live streaming an event should be taxed in the country where the consumer client is established.

The UK has not amended its VAT legislation and we have not seen any communication from HMRC stating they have changed their view concerning the place of supply rules. We therefore expect HMRC to maintain its position that the place of supply for live streaming an event online to consumers is the UK and UK VAT would be due.

A UK event host would therefore have to charge UK VAT under UK rules and EU VAT under EU rules.

Essentia has reached out to HMRC to raise this issue but the response we have received is not encouraging as it did not address the issue we raised and instead misclassified the nature of the streaming services.

Therefore, until further notice, there is a risk of double taxation for UK hosts that want to charge a fee for virtual events.

Checklist

If you plan on streaming an event in 2025 you should consider the checklist provided below:

• Do you offer livestreaming of the event to customers? If yes, is it a standalone service or is it offered as a package with other services (e.g. in person admission, sponsorship etc.)
• Check what kind of arrangement you have in place from a fee perspective for livestreaming events. For example:
  • Is this service free of charge? If yes, is this part of a membership fee or similar arrangement?
  • If you charge a fee, is this separate from the in person admission or is the service bundled?
• Do you know which of your customers are consumers? Is this information collected by your invoicing or client management software?
• Do you have an OSS registration if you plan on charging fees for virtual events to consumers in the EU?
• Have you checked if you have up to date information on the applicable VAT rates?
• Is your invoicing system able to raise invoices with different VAT rates?
• Have you invoiced or received remuneration for these services before or after the new rules took effect (1 January 2025)? What VAT treatment did you apply?
• Have you factored into your pricing model the requirement to charge VAT to consumer clients?
• Do you need to amend any contracts or Terms and Conditions to be able to charge VAT to new or existing clients?
• Do you offer access to recorded content? Is the content offered as a standalone service or as a package with other services?