The French Finance Law for 2024 (Article 83, I-1° to 3°) has adopted new rules for virtual cultural, artistic, sports, scientific, educational, entertainment, and similar activities, based on the European Union’s Directive (EU/2022/542) of April 5, 2022. These new rules will come into effect on January 1, 2025.

Current VAT Rules: Under the current legislation, events like cultural, artistic, sports, scientific, educational, and entertainment activities (including fairs and exhibitions) are taxed in France if they are held physically in France, whether the attendee is VAT-registered or not (Article 259 A, 5° a and 5° bis of the French Tax Code).

Challenges with Virtual Events: However, these rules are no longer suitable for virtual events, especially after the changes brought on by the COVID-19 pandemic, where more events are now held online rather than in person.

New EU Directive: To address this, the EU Directive (EU/2022/542) has updated the rules for taxing virtual events. Now, if an event is provided virtually, the tax will be applied based on the location of the participant (whether or not they are VAT-registered). This change aligns French tax laws with European standards and reflects the growing trend of virtual events that people can attend remotely.

What are the practical implications for businesses registered in France

The above means that virtual events are now assimilated to selling digital goods according to French and EU legislation.

1. Establish whether your events are B2C in the eyes of the law. Is your business charging each client as an individual directly? If yes, then new rules apply to you. If your official client is a platform, and participants clients of the platform and not you directly, then you should apply standard B2B service provision rules. The same goes if your clients are companies (professional events) – B2B rules apply.
2. If your events fall under new regulations, ensure that you are collecting the country for each participant.
   • For clients based in France, apply 20% VAT if you are VAT-registered, and no VAT is you aren’t
   • For clients based in EU outside of France there is a 10 000€ threshold.
     • If your overall sales of all products, digital services, virtual events in a calendar year to all B2C customers in all of Europe is below 10 000€, you apply same rules as for French customers
     • If you cross the threshold, you must start charging VAT at the rate of the country of each customer, and pay that VAT to the tax authorities of each of the countries. You can either register in each country separately, or use One Stop Shop facility of the French Tax office website to make all of your declarations. If you’re still under the VAT threshold, this rule still applies to you (you do not charge VAT to your French customers though – until your total sales reach the French VAT threshold). Once you register, this is permanent, you do not restart from 0 next year.
   • For clients based outside of EU, unfortunately there’s little clarity at the moment. From the 1st of January 2025 you should apply the laws of each country where your clilents are based. At the time I’m writing this article, those countries do not seem to have caught up the EU legislation, so you need to monitor the situation carefully for changes. It is, in my opinion, likely that eventually virtual events will be included in the digital services. So the plan of action I can recommend is as follows
     • Check the country’s legislation for a definition of digital products/services. If virtual events fit the description, follow the rules for digital product/services sales (article upcoming soon).
     • If not, check the counrty’s legislation on VAT/Sales tax etc on regular events and the place of taxation. If the place of taxation is considered to be organiser’s location / place of the event, we’re in a paradox, as the laws are contradictory. This means for now, the businesses registered in France do not have to charge the VAT.
     • Keep checking for more information regularly.

Is your business registered outside of EU

If you organise virtual B2C events and have clients in EU, from 1st of January 2025 you have to register for VAT and collect VAT as per each customer’s place of residence, from the first sale – the 10 000€ does not apply to you. This may mean, depending on your own country’s legislation that you must collect VAT/Sales tax twice – in your country, and in Europe.

Conclusion

Follow the new ucpoming information on the topic closely and seek professional advice if you are not sure which rules apply to your particular case.