EU VAT: new rules for livestreaming, virtual events, small businesses, and art sales starting 1 January 2025 – 3 key insights

What is changing starting 1 January 2025?

• Livestreaming and virtual events: for business to consumer (B2C) transactions, VAT will become chargeable based on the consumer’s location, not where the supplier is based or where the event takes place.
  
• Small and medium-sized enterprises (SMEs): SMEs can now qualify for the SME VAT exemption scheme in other EU countries, not just their home country, if they meet certain conditions.
  
• Art sales: the additional margin scheme will no longer apply to works of art, collectors’ items, and antiques sold to or imported by resellers when the reduced VAT rate is used.

Why is this important?

• Livestreaming and virtual events: businesses will need to account for VAT based on the consumer’s location. This could impact consumer experience and data privacy policies, as the consumer’s location must be evidenced. It could also affect T&Cs and pricing due to the varying VAT rates across the EU. Additionally, updates to ERP systems may be necessary to handle new transactional master data and VAT logic. Businesses will also need to decide whether to settle VAT through the One Stop Shop (OSS) or not.
  
• SMEs: an EU-wide VAT exemption can simplify VAT management for SMEs and encourage cross-border trade. Importantly, online platforms that facilitate transactions by SME sellers will need to monitor their sellers more closely to ensure and substantiate that all sales by SMEs are VAT compliant.
  
• Art sales: changes in the margin scheme will impact artists, resellers, and auctioneers. They will need to carefully manage VAT for each transaction, especially distinguishing situations when the reduced VAT rate is used versus not used (such as when buying from artists using the SME scheme).

Recommended actions

We recommend that businesses assess whether they are affected by these changes. If they are, they may need to update their operational processes and controls to manage the new requirements effectively. Please contact Andy van Esdonk or your regular Bird & Bird contact to discuss next steps.