European VAT changes - entertainment services affected
1 January 2011 saw further changes to VAT rules for B2B cross border services in Europe.
The 2011 changes affect cultural, artistic, sporting, scientific, educational, entertainment and similar activities. Please not that admissions to events are still taxed in the country where the event takes place.
The good news is that B2B transactions in the entertainment industry have been simplified. What this means is that VAT is charged when the customer is a business based in another EU country. The result being that VAT on cross border services is self-accounted for by the customer on their overseas VAT return by applying the reverse charge.
This includes services and income such as:
- Royalties
- Services of actors/singers/entertainers
- Advances
- Intermediary services
- Advertising and most sponsorship
- Accounting for VAT by using the reverse charge
Normally it is the supplier of a service who must account to the tax authorities for any VAT due on the supply. For the cross border services described above, the position is reversed and it is the customer who must account for any VAT due. This is known as the reverse charge procedure.
As a result of the EU-wide changes, the reverse charge has become more widespread and the liability for accounting for VAT has shifted from the supplier's country to the customer's country.
Contact us
Please contact Alison Horner on 01604 624 011 or email alison.horner@mhllp.co.uk
