The future of VAT for online events: what every UK business should know

As of 1 January 2025, the European Union (EU) has implemented significant changes to VAT regulations, directly impacting businesses involved in live streaming and virtual events. These new rules shift VAT liability from the service provider’s location to the consumer’s location. Understanding and adapting to these changes is crucial for compliance and continued success in the EU market.

What is changing with VAT in 2025?

Under the previous system, VAT on virtual events was typically based on the location of the event organiser. However, at the beginning of 2025, the VAT liability was shifted to the customer’s location. This means that businesses must now charge VAT based on where the customers are situated within the EU. For instance, if a UK-based company offers a virtual conference attended by consumers in France and Germany, it must apply the respective French and German VAT rates to those sales.

Who is affected by these changes?

The new VAT rules primarily impact Business-to-Consumer (B2C) services including:

• Livestreamed events: concerts, webinars, and conferences streamed live to an audience.
• Virtual courses & workshops: online educational sessions with live interaction between instructors and participants.

It is important to note that services involving pre-recorded content with minimal human intervention may continue to follow existing VAT rules for electronically supplied services.

Impact on businesses selling to the EU

For UK businesses providing virtual events to EU customers, these changes introduce several challenges:

• VAT registration and reporting: Businesses may need to register for VAT in each EU member state where their consumers are located. Alternatively, they can utilise the One Stop Shop (OSS) system, which allows for centralised VAT reporting across all EU sales.
• Determining consumer location: Accurately identifying and verifying the location of consumers is essential to apply the correct VAT rate. This may require updated to billing systems and customer data collection processes.
• Handling VAT rate variations: Each EU member state has its own VAT rate. Businesses must stay informed about these rates to ensure accurate VAT application and compliance.

The One Stop Shop (OSS) System – what is it?

The OSS is an EU-wide system designed to simplify VAT compliance for businesses selling goods and services to consumers across multiple EU countries. By registering for the OSS in a single member state, businesses can:

• Declare and pay VAT: Submit a single electronic quarterly return covering all eligible sales to consumers in other EU member states.
• Centralise communication: Interact with a single tax authority, even for sales taxable in other member states.

This system reduces the need for multiple VAT registrations across the EU, streamlining the compliance process.

Challenges businesses need to prepare for

• Tracking consumer location: Implement systems to accurately determine and record each consumer’s location to apply the correct VAT rate.
• Updating billing and IT systems: Ensure that invoicing and billing systems can handle multiple VAT rates and are capable of determining the correct VAT based on consumer location.
• Staying informed on VAT rates: Regularly monitor VAT rates across EU member states to maintain compliance and adjust pricing strategies accordingly.
• Potential double taxation: Be aware of the risk of double taxation, where VAT might be due both in the UK and the EU country where the consumer is based.

Practical Steps to Stay Compliant

• Assess current VAT practices: Review existing VAT procedures to identify areas impacted by the new regulations.
• Register for the OSS system: If applicable, register for the OSS to streamline VAT reporting across multiple EU countries.
• Update billing systems: Ensure that invoicing systems can accurately calculate and apply the correct VAT rates based on consumer location.
• Monitor VAT rates: Stay updated on the varying VAT rates across EU countries to ensure correct application.
• Seek professional advice: Given the complexity of international VAT laws, consulting with tax professionals can provide tailored guidance and help mitigate potential compliance risks.

How HB&O can help you

The 2025 VAT changes bring significant complexity, but you don’t have to navigate them alone. Our in-house VAT specialists are here to support your business in understanding and complying with the new rules. Whether you need guidance on VAT registration, help with the OSS scheme, or a complete VAT compliance strategy, our expert team is ready to assist.

Email: [email protected]  

Phone: 01926 422292