Online events - where is VAT due? - ECJ C-532/22 - SC Westside Unicat SRL

Online events | where is VAT due?

When selling services, it must always be determined in which country VAT is due. Is that in the country where the seller is located, the country where the buyer is located or could it also be another country? All three options are possible. Depending on the type of service and/or whether the buyer is an entrepreneur or private individual, it can be determined where VAT is due.

Physical events | online version

For physical events such as performances, concerts, conferences, training courses and exhibitions, it was fairly easy to determine in which country VAT was due before the rise of the internet. Namely, in the country where the event physically took place. A Dutch entrepreneur who organized an exhibition in Germany was liable to pay VAT in Germany. However, the rise of the internet has made it possible for these services to also be attended online. As a result, the link with the physical location has been lost. At some point, for VAT purposes, the question arose as how to determine where VAT is due if the event can be attended online. After all, a logical link can no longer be made with a physical location.

Online version | where is VAT due?

If the customers of these online events are entrepreneurs, it would be logical based on the EU VAT system to seek connection for VAT levy at the place of business of these entrepreneurs. If the seller and buyer are located in two different countries, this system is applied in 90% of all services. For example, if a Dutch seller sells services to an entrepreneur based in Germany, German VAT is due (with some exceptions). This German entrepreneur is then responsible for paying the German VAT based on the reverse charge mechanism. If the end customers/buyers are private individuals, an attempt is made to align the VAT levy with the country in which the private individual lives, based on a similar methodology.

Rulings of the Court of Justice

The Court of Justice had to answer this question for the first time in 2019 in the Geelen case (C-568/17). This case concerned interactive online services that were sold to end users. Strangely enough, the outcome of this case is that VAT often takes place in the country where the seller is established, especially if the service is 'complex in nature'. This can quite easily be the case when it comes to interactive online services. Suppose the seller of such an online service/event is based in the Netherlands and the buyers are established (entrepreneur, say Germany) or live (private individual, say Belgium) in other countries, Dutch VAT is due on each of these services. This therefore deviates from the logic of the EU VAT system mentioned above. Based on this logic, one would end up with German VAT for the entrepreneur and Belgian VAT for the private individual.

In a new ruling by the Court of Justice in the Westside Unicat case (C-532/22), the question was whether the outcome of the Geelen case also applies to the sale of interactive online services to another entrepreneur ( not an end user), for example an online streaming service. This online streaming service then sells the content to end users. The Court of Justice has determined that the system as determined in the Geelen case does not apply if the online service is first sold to another entrepreneur. The normal rules for services between entrepreneurs apply, which means that VAT is levied in the country where the purchasing entrepreneur is established. When selling interactive online services to end users through the online streaming service, the outcome of the Geelen case may apply (and VAT levy in the seller's country).

New legislation 2025

The ruling in the Geelen case (see above), with the result that VAT is often due in the country where the selling entrepreneur is established, has led to much discussion. Ultimately, it was decided that from 2025, such online services will again be taxed where the buyer (entrepreneur) is established and/or the private individual lives. In the meantime, you may still have to deal with the two court cases discussed above, which may result in you having to charge Dutch VAT.

This system is perceived as very complex, and it is. If you would like to know more about this development, please do not hesitate to contact us.

If you have any questions about this topic or if you would like to discuss the topic further, please do not hesitate to contact us at info@vatpartners.com