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April 25, 2022
EU VAT rates proposal agreed to and published in the Official Journal
On 6 April 2022, an adjustment to the European Union (EU) Value-Added Tax (VAT) Directive was published in the Official Journal.
Amended EU rules on VAT rates
Place of service "virtual access"
The Directive provisions that are intended to extend access to certain activities in the business-to-business (B2B) sphere and to these activities in general in the business-to-consumer (B2C) sphere are “clarified.”
The rule in the EU VAT Directive for determining the place of supply of services in respect of admission of VAT taxable persons to cultural, artistic, sporting, scientific, educational, entertainment or similar events, such as fairs and exhibitions, and of ancillary services related to the admission, supplied to a taxable person, no longer applies if the events are virtual.
A similar specific rule is introduced for determining the place of supply of certain activities that are streamed or otherwise made available virtually, supplied to non- taxable persons such as private individuals. These activities must be services, and ancillary services, relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, such as fairs and exhibitions, including the supply of services of the organizers of such activities. The place of supply of these services shall be the place where the (non-taxable) customer is established or has his domicile or habitual residence. The EU’s “effective use and enjoyment” rules can also be applied to this provision.
Date of entry into force
The new rules entered into force on 6 April (the date of publication).
All new rules relating to the application of the VAT rates can be applied by Member States from that date, with the exception of the application of a lower VAT rate to live streaming of shows, sports events, theaters, circuses, etc., which can be applied by Member States from 1 January 2025.
The same date (1 January 2025) applies to the new rules regarding the place of supply of (access to) virtual events as well as the new rule under which the lower VAT rate can no longer be applied to transactions involving works of art where the special EU VAT “margin scheme” applies to these transactions.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Belastingadviseurs LLP, Amsterdam