New VAT rules for online entertainment, culture and education in 2025

Starting on 1 January 2025, VAT on virtual events (e.g., cultural, artistic, sporting, scientific, entertainment or similar events) and online courses in the EU will be taxed at the applicable VAT rate in the member state of the recipient, ushering in a significant change to the VAT treatment of these services. You may therefore have to charge VAT from another EU member state.

This change will come into play, in particular, if the above services are provided to private individuals (i.e., B2C transactions). The rule will also apply where the services are provided to VAT-registered persons, typically businesses (i.e., B2B transactions), but only if the services consist of granting access to an event. If there is no granting of access and/or no event, the services will be taxed in the member state of the recipient (which is currently the rule). VAT is then reverse charged to the customer on the basis of the standard reverse charge rule if the supplier is not established in the member state of the recipient.

Declaring VAT

How VAT is declared and paid depends on the status of the customer. If the customer is a VAT taxable person, the VAT can be reverse charged if the supplier is not established in the recipient’s member state. In this case, the customer declares the VAT. If the customer is a private individual, VAT cannot be reverse charged, but the supplier can file a simplified declaration via the one-stop shop (OSS). If the supplier does not use the OSS, it will need to register for OSS before 1 January 2025 to be able to declare VAT via the OSS as from that date.

The OSS can be used to file a declaration for all EU member states in which the online services are taxable.

If the supplier elects not to use the OSS, it will have to register for VAT in each EU member state where VAT is owed and file a local return.

If the customer is located outside the EU, from 1 January 2025, no VAT will have to be declared in the EU for these online services. However, VAT may be due in the non-EU country where the customer is located.

Online and offline services

If services are offered partly online and partly offline, for example, a course that must be followed in both a virtual and a live format, the supplier will have to determine how this supply should be qualified for VAT purposes. If the online portion is the main part, the offline portion will be able to be absorbed into this, and vice versa. The online and offline portions can also constitute separate supplies for VAT purposes. When making the determination, the duration of the online and offline portions of the course and whether there is a coherent program or whether the parts can also be followed separately are important.

Suppliers will also need to be aware of the impact of organizing hybrid events where online participation can be converted to live participation, or vice versa. This may have consequences for where VAT is owed and how much. It is also important that relevant contracts set out the general terms and conditions on how to deal with a changed VAT amount. For example, will extra VAT due be passed on to the customer and whether the customer can obtain a VAT refund if the supplier owes less VAT?

No change for electronically supplied services (ESS)

ESS are currently taxed in the country where the customer is established or lives and these rules will not change.

A service is provided electronically if it is provided automatically via the internet and there is minimal human involvement in the provision of the service; a pre-recorded online training where no contact is possible with the teacher (before, during or after the training) is an example of an ESS. The same training offered live via the internet where the teacher responds to questions from participants, however, is an online educational event or educational service.

Practical arrangements

A number of practical arrangements apply to ESS, such as rules regarding supporting documents that the supplier must collect to prove where the customer is located. The European Commission's proposal to amend the VAT Implementing Regulation, adopted by the member states on 5 November 2024, shows that it is intended to introduce these practical arrangements for online cultural, artistic, sporting, scientific, educational and entertainment activities as well.

Learn more

If you have any questions about the change or if you would like to have your tax position assessed, please contact one of our advisors.