How are Virtual Events Actually Taxed?


While the coronavirus has brought harm and havoc to economies across the globe, it has also created new opportunities and working methodologies across a broad range of industries.

Take virtual events platforms, for example, which have seen a 1,000% uptick in demand since the emergence of the Covid-19 pandemic back in March 2020. 

But how do virtual events differ from the physical alternative, and how are such entities actually taxed? Let’s find out!

Physical vs Virtual Events – How Do They Differ?

In simple terms, a virtual event is an online gathering that sees attendees interact virtually rather than meeting in a physical location, with this concept having become increasingly popular throughout the digital age.

But how does this type of event differ from a physical meeting from a tax perspective? Well,  physical events hosted within the UK and the EU have to apply a value-added tax (VAT) to the price of whatever you sell, with the former setting a basic rate of 20% to the value of each product.

This rate of VAT will be applied to a host of associated products, from tickets and exhibition stands to sponsorship packages and award entries, depending on the precise nature of your event and its scale. 

Regardless, this creates a clear set of criteria regarding the taxation of your event, which is not the case when hosting a digital alternative.

Certainly, virtual events are considerably easier to host, but they’re far more complex and difficult to tax due to a number of reasons.

These include the lack of a specific location and the potential to create multinational virtual events, while unconventional ticketing procedures may also make it difficult to apply a defined tax levy.

Ways to Approach Taxing Virtual Events

However, there are some ways to approach taxing virtual events, with one of the easiest being to invest in third-party software.

In this instance, the role of such software is to determine the correct rate of each transaction and apply it (in real-time) to an attendee’s order, with most using advanced geolocation technology to identify each individual user’s IP address.

This enables you to add the tax on the total basket value before confirming transactions or ticket purchases, creating a viable and compliant VAT levy in the process.

Another option is to liaise with an expert management and consultancy firm, who can manage the process externally and leverage their own software solutions to identify, verify and apply tax levies.

Of course, this option comes at a premium, but this may not be much more expensive than the cost of procuring third-party software offerings.

Although you could argue that it’s considerably more expensive than a bespoke ‘do-it-yourself’ option (where you manually add relevant VAT charges to tickets and services), there’s a tendency to cut corners with the latter and a sizable risk that you’ll ultimately lose money over time.

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