New EU VAT rules for B2C supplies of livestreaming and virtual events

3 January 2025| CATEGORIES: EU VAT, New tax rules, One Stop Shop| TAGS: B2C, EU, Livestreaming, new VAT rules, Virtual events

With effect from 1 January 2025, the EU has introduced new VAT rules for B2C supplies of livestreaming and virtual events. The change will impact UK and other non-EU suppliers making supplies to EU consumers.

How are the rules changing?

The new rules apply to services such as livestreaming sporting, cultural or scientific events and online courses and conferences. The place of supply for VAT purposes has changed to the place where the consumer belongs. Previously, supplies of these services were generally taxed where the supplier was based or where the event took place.

VAT will be due at the applicable VAT rate in the member state of the recipient.

In order to account for the VAT due on these types of supplies businesses must either:

• register for VAT in every EU country where it has customers, or alternatively,
• opt to use the special EU simplified VAT registration scheme called the One Stop Shop (OSS) to declare VAT for all 27 member states.

There are no VAT registration thresholds for non-EU businesses, so VAT is due from the very first sale.

Further information on how the EU One Stop Shop operates is available here.

Other implications

The change could affect suppliers’ T&Cs and pricing due to the varying VAT rates across the EU. Standard VAT rates in the EU currently range from 17% to 27%.

Furthermore, with effect from 1 January 2025 EU member states also have greater flexibility in applying reduced VAT rates.  This includes an option for member states to apply the same VAT treatment to livestreamed activities, including events, as applies to those events which, when attended in person, are eligible for reduced rates. This includes:

“admission to shows, theatres, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events as well as sporting events and facilities or access to the livestreaming of those events or visits or both”.  (Annex III to Directive 2006/112/EC)

It is therefore important that suppliers stay update with any VAT rate changes.

Updates to ERP systems may be necessary to deal with changes to the VAT charging logic.

There is no change in respect of the rules applying to B2B supplies. VAT is due in the place where the business customer is based, with the customer generally accounting for the VAT due by applying a ‘reverse charge’ adjustment on the VAT return.

Potential double taxation and non-taxation issues

The UK has not updated its VAT rules in line with the EU. The lack of harmonisation could give rise to the risk of double taxation and non-taxation on supplies between the UK and EU.

A UK business making supplies of these services to an EU consumer will be liable to UK VAT under the existing UK rules and EU VAT under the new EU rules.

However, there will be no taxation on supplies made by an EU business to a UK consumer as under UK legislation VAT is due where the supplier belongs (EU), whereas under the new EU rules VAT is due where the customer belongs (UK).