EU VAT pitfalls international conference organisers
Conference & exhibition organisers always used to follow the EU VAT regulations pertaining to the generic VAT services classification known as “cultural, artistic, sporting, scientific, educational and entertainment”. Pre 2011, this category had been an exception to the general VAT rules. The place of supply of these services for VAT purposes was defined as the place where the event was performed.
A change however did occur on 1 January 2011. Within the Directive 2008/08/EC, known as the VAT Package, a new Article 53 came into effect. It stated that the place of supply of services of “admissions” to events is where the event takes place.
What did this mean? While, by implication, exhibition services VAT treatment changed to the place where the exhibitor is based, conference and exhibition delegate admissions continued as before i.e. the VAT applicable being the VAT of the location where the event takes place.
These rules continue today, but still cause considerable confusion and can lead to expensive pitfalls.
Reverse Charge on live event services
The matter is further complicated by the upsurge in the use of the reverse charge mechanism on local taxable supplies in certain Member States. Also, how should a conference organiser deal with VAT on associated exhibition service supplies and on sponsorship packages, and for supplies to non-VAT registered individuals?
Incorrect invoicing can be costly with potential loss of input VAT recovery, leaving significant holes in project budgets. If mistakes are made, then post-event regularisation may be possible in some countries, but the whole process can be protracted and debilitating. In worst case scenarios, retrospective correction may lead to double whammy VAT costs; not only is VAT payable on the sales, but input VAT suffered on supplies is disallowed. In the post-event phase, conference delegates will simply ignore additional invoices for VAT. Further, the tax authority may also impose prohibitive penalty fines.
It clearly makes sense for event managers in these situations to carefully determine the latest VAT position at the outset in each country. Some international conference organisers find it useful to establish an invoice grid aide memoire for their accounts personnel to follow when raising invoices.