New VAT rules for virtual events

On 1 January 2025, the EU changed the place of supply rules for accessing virtual events supplied to private individuals. The change means that VAT is no longer due where the supplier belongs but instead the place where the service is consumed, which is the country in which the customer belongs. This brings virtual events into line with the EU (and UK) VAT treatment of electronically supplied services (ESS) and requires the supplier to account for the VAT due in the Member State of the consumer. 

These new rules create practical issues for the supplier such as determining where the customer belongs and what evidence will be needed to support this treatment. Within the EU, the VAT due can be accounted for via the Union One Stop Shop (OSS) where the supplier is an EU established business, which considerably eases the compliance burden. UK and other non-EU suppliers of virtual events can use the Non-Union OSS mechanism so there is also a requirement for only one VAT registration in the EU.

Any UK suppliers of virtual events will need to take account of this change and account for VAT in the EU country in which their customer belongs. However, they do need to consider how these new rules interact with the existing UK rules.

Conflicting UK and EU rules

The UK has not made any changes to its VAT rules and continues to treat these supplies as liable to VAT where the supplier is established. Therefore, UK suppliers of virtual events need to consider that the UK rules are now in conflict with those in the EU. 

The result of this means that a UK supplier of a virtual event that is supplied to a private customer in France has to account for UK VAT (under the UK rules) and also French VAT (under the EU rules). This double taxation will almost certainly have a significant impact on the profitability of the transaction and will also lead to additional administrative obligations for the supplier.

This contrasts with the position for EU suppliers of virtual events to customers in the UK which is that there will be no taxation. This is because under the EU rules, the VAT is due where the customer is based and under UK rules, VAT has to be accounted for where the supplier is established. This non-taxation will give a competitive advantage to EU suppliers over those in the UK. 

What should impacted suppliers do?

Prior to the UK’s departure from the EU, the rules in the UK would have changed at the same time as those in the EU as it had to adopt the EU position. It is not clear whether the failure to align the rules is a deliberate action by the UK Tax Authorities as there has, to date, been no clarification of their position. 

If the UK does change its rules, it will benefit in collecting VAT on supplies of virtual events by all non-UK suppliers and also relieve the double taxation burden on UK suppliers. In order to gain the benefit of collecting VAT from non-UK suppliers, it will have to publicise the change and identify those suppliers who do not comply. 

We have seen evidence of this happening with non-UK suppliers of ESS, with HMRC contacting suppliers who are not registered for UK VAT. Therefore, if there is a change in the UK rules, non-UK suppliers will need to register for UK VAT and account for VAT on their supplies to UK consumers. As there is no registration threshold for UK businesses, this registration will be immediate on the first sale.

All businesses in this sector should review their supply chains and in particular the place where customers are located to confirm how the new rules impact them. This will help ensure that where double taxation might occur it can be planned for and where it looks like no taxation is due, that is confirmed.

For further information on anything discussed in this article, please contact Rob Janering, or your usual Crowe contact.