VAT and Hybrid Events in the European Union

The world of events has known a lot of turmoil in recent years because of the pandemic and the imposed travel restrictions. The events industry had to adapt, and so virtual events took that place, becoming the “new normal” in the two years that followed.

AUTHOR: OUMAR COUNTA, DIRECTOR OF TAX DEPARTMENT AT BC&A 

In the pre-pandemic years, events were mainly organised in person and the VAT rules for participation were clear and set.

When the crisis ended and it became safe to travel again and meet in-person, events were organised physically again, but organisers kept virtual participation because it was more suitable for some participants; in fact, it brought more revenue and notoriety to their events.

Hybrid events have become the new trend. The sector has changed a lot recently, and although businesses have adapted quickly, VAT rules have also become difficult to keep up with.

Since the VAT rules for sponsorships and exhibitions are the same, regardless of how the event is organised, this article focuses solely on the taxation of attendees. At the same time, since corporate events do not deal with registration, this article only concerns events where participation is open to anyone who wants to attend.

How the VAT applies for different types of participation

1) On-site participation

EU legislators have clearly established the taxation of participation in physical events (Council Directive 2008/8/EC − articles 53 and 54).

Admission for both taxable and non-taxable persons is subject to VAT in the country where the event physically takes place.

For instance, if a congress is organised in Italy, all in-person attendees are invoiced with 22% Italian VAT.
 

2) Virtual attendees when the event is organised fully online

The generalisation of virtual events during the pandemic found the EU legislator somewhat unprepared.

Organisers only had clear VAT rules for the electronically supplied services, defined as “services which are delivered over the Internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology”.

This is not the reality of virtual congresses – live events – with speakers and attendees interacting with each other.

According to the rules of law, where there is no special rule, the general rule applies. Thus, participation in virtual events was taxed according to the general rules for services:

• For businesses (B2B), the place of supply is the place where the participant’s activity is established. In this case, there is no VAT amount on the registration invoice, as the reverse charge mechanism is applied. So, if the congress organiser sells a virtual participation to the Company X – which bought it for its employees – then the invoice is issued with zero VAT, under the reverse charge.
   
• For non-taxable people (B2C), the place of supply of services is the place where the supplier has established their activity. In this case, the organiser applies the VAT of their own country. Let’s say that the virtual participation is bought by a non-taxable individual who pays for the purchase themself. The congress organiser issues an invoice with the VAT of their country of establishment. For instance, a French organiser applies the 20% French VAT.
   

How VAT applies to participation in hybrid events (events organised in person with participation also online)

1) How VAT is currently applied

New question: are the VAT rules for the physical admission applicable for the online attendance to an event organised in-person?

EU legislation does not seem to include online attendance.

When clarifying the notion of “supply of services and ancillary services related to the admission to events”, the EU Regulations no. 282/2011 describes them as: “supply of services of which the essential characteristics are the granting of the right of admission to an event” (such as shows, theatrical performances, matches, competitions, conferences, seminars, etc.) and “the ancillary services shall include in particular the use of cloakrooms or sanitary facilities”.

Nevertheless, in order to adapt to the new reality and provide some clear rules for congress organisers, some EU Member States (Finland, Italy, etc.) have decided that, in the case of hybrid events, the VAT rules applicable to face-to-face admission should also apply to online admission, which means that registrations for virtual participation are subject to VAT in the country where the event is physically held.

The explanation given was that online participation does not imply the use of a different service provision from that offered to face-to-face participants, as each online participant also has the possibility of assisting and interacting with the speakers, just as if they were there.

If the congress is organised in Italy, all attendees – on-site and virtual – are invoiced with 22% Italian VAT.

2) The new legislation on virtual attendance

EU legislators made it clear that the VAT rules for the physical attendance shall not apply to the virtual attendance (Council Directive 2022/542). According to the amended Directive, the new place of supply for virtual events will always be the place where the customer is established, has their permanent address, or usual residence.

If an Italian virtual participant attends an event organised in Germany, the place of taxation is Italy, which means that the Italian individual (B2C) receives an invoice with 22% Italian VAT. If the client is an Italian business (B2B), the invoice is issued under the reverse charge mechanism. This mechanism allows the Italian company to pay and deduct the Italian VAT through its own VAT returns.

The main idea behind this new place of supply for virtual events is to guarantee taxation in the Member State of consumption of all services that can be supplied electronically. The definition of the concept of “electronically supplied services” will have to be revised to be broader. The new rules on the place of supply apply to virtual events, but also to all live-streamed activities.

What information should be kept?

The new rules regarding the virtual attendance are set to be effective as from January 1, 2025. Member States must adopt the regulations and administrative provisions by December 31, 2024.

In the meantime, however, organisers of hybrid events should carefully look into the rules laid down by the tax authorities of the country where they are organising the event in order to avoid sanctions and financial losses.
 

ABOUT THE BC&A

Founded in 2004, BC&A is a VAT consultancy firm specialised in VAT management and recovery for association events. BC&A has been involved in hundreds of events, some with as many as 25,000 participants. Its expert guidance allows for several advantages: maximum recovery for the organiser and the participant; no local VAT registration required; and expedited reimbursement in Europe.