When in Rome…. or how a change of the practice is coming into force immediately

posted by Bart Caluwé, our expert for the Tourisme

As you might know, the VAT treatment of services relating to events changed as of beginning of 2011. Various EU Member States however took a different approach to the question where the services of intermediaries, who are selling tickets for events to non-taxable persons, should be taxed.

Some EU Member States took the approach that without regard to the fact whether the tickets are sold directly by the organisers or by an intermediary (in its own name), these services should be in all cases qualified as relating to events, and as such taxed there where the event takes place. This approach was also shared by the European Commission and confirmed at the level of the European VAT Committee in June 2012.

Other EU Member States (including Germany) however took a different view, according to which the services supplied by intermediaries acting in their own name, were neither considered services of „event organisers“ nor „ancillary to the event“ and were falling under the general place of supply rule. As a result, in case of supplies to non-taxable persons, these services were taxable there where the supplier (intermediary) established its business. This discrepancy of the application of the VAT Directive between the various EU Member States was leading whether to non-taxation or to double taxation of these services. And for private consumers buying tickets from Swiss based intermediaries for events taking place in Germany, no Swiss VAT would be due instead of the German VAT rate of 19%.

On 10 June 2013, the German Ministry of Finance published a new practice and interpretation of German VAT law entering into force already on 1 July 2013. Intermediaries that are selling tickets outside of the country where the event actually takes place will become subject to VAT in the country where the event is taking place. This means that these companies as from 1 July 2013 should VAT register in Germany. Swiss based companies and intermediaries that are selling tickets related to events in Germany to Swiss customers will be impacted. They cannot argue that they have not been made aware of the change in practice. That said, Swiss companies could decide to adapt their business model to avoid a German VAT registration and opt to charge their services as a disclosed agent (no longer selling the tickets in their own name). This would mean that the Swiss intermediary would charge its agency services to the actual organiser of the event in Germany. If the latter is based outside Switzerland (i.e. in Germany) these services would not be subject to Swiss VAT and the VAT taxable organiser established within the EU (i.e. Germany) would need to self-account for local VAT due (e.g. in Germany).


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