EU law change for virtual events: how will it affect you?

What is an online event?

Suppose that your business owns a yoga studio (registered for VAT) and you give classes and private sessions in the studio but also organise online events where customers can do the exercises at home while following your guidance online, and they pay a fee for each session. What is the VAT position?

These online events are business to consumer (B2C) and, under UK law, the place of supply for VAT purposes is where the supplier is based, i.e. the UK in your case. You will charge 20% VAT, irrespective of where your delegates live.

For business-to-business (B2B) supplies to EU customers, the place of supply is where they have their business, and they will account for VAT by doing a reverse charge calculation on their own returns. You will not charge UK VAT on these sales but must still include them in Box 6 of your returns.

EU law change

On 1 January 2025, a change in EU law was made and it applies to any business that supplies virtual and streaming services, e.g. where a conference is streamed online with a fee charged for viewing, or distance learning is supplied with a live element. In such cases, the place of supply for B2C sales now depends on where the customer is based and not the supplier, with VAT charged according to the rate that applies in the customer’s country.

Example. The yoga studio has a customer in Sweden who attends the online classes and pays £15 per week including VAT. Until 31 December 2024, the studio declared output tax of £2.50 per week on its UK VAT return, i.e. £15 x 1/6. Since 1 January 2025, Swedish VAT of £3 is also payable. The rate of VAT in Sweden is 25%, so £15 x 1/5.

To pay Swedish VAT in this example, the studio can register for the EU’s One Stop Shop (OSS) scheme, which means registering in one member state and then paying the tax collected in all member states on a single quarterly return.

Registering for the OSS avoids the need to register in each separate member state where you make B2C sales.

You cannot claim VAT paid on expenses in the EU on an OSS return, this must be done by making a separate claim to each state where VAT has been paid, known as a 13th Directive claim.

Double taxation?

HMRC has not confirmed if it will eventually amend UK law, although this is desirable because there is both UK and EU tax to pay on supplies made since 1 January 2025, known as double taxation. In the Swedish example, £5.50 of the £15 fee will be paid in VAT, with a lot of extra administration work for the yoga studio.

You should consider the impact on your pricing of the different VAT rates in the EU, e.g. Hungary has a standard rate of 27% compared with Luxembourg at 17%.

If your business does a lot of events, you should consider setting up an EU-based subsidiary company if double taxation is a risk.