EU VAT – Changes to virtual B2C services

In both the EU and the UK, the place of supply of services provided to consumers (business to consumer or B2C) is generally where the supplier is established. There are already exceptions to this rule, such as electronically supplied services such as downloads of music, games or films where the place of supply is where the customer is established. If supplier and customer are not based in the same country however, the supplier is required to register for VAT in each country where it has customers or, for EU-based customers, can use the simplification of the EU One Stop Shop for a single EU VAT registration.

With effect from 1 January 2025 EU VAT will also be due on virtual events and online training courses delivered to consumers based in the EU with the applicable VAT rate being that of the customer’s country. A One Stop Shop simplification will be available to providers established in the UK.

Any UK business providing virtual cultural, artistic, sporting, scientific, educational, entertainment and/or similar services, or virtually providing access to these events, should therefore review its service offering to consumers to ensure EU VAT compliance and adjust its pricing policy if necessary.

HMRC has already taken the approach, although not aligned across its published guidance, that B2C online training services can be treated as taking place where the overseas customer is based in certain circumstances. However, overseas suppliers are currently not required to pay UK VAT on services provided to UK-based customers and we understand that HMRC has no appetite to change the UK VAT rules. This is therefore another example of the UK and the EU VAT rules diverging with potential double taxation for UK businesses and non-taxation for EU providers.

Would you like to know more?

If you would like to discuss any of the above, please speak to your usual Blick Rothenberg contact or Antje Forbrich using the form below.