VAT registration obligations for foreign event organizers in Hungary
and Hungarian event organizers abroad
– the following changes are expected from 2025!
As we mentioned in our previous newsletter, as a result of EU legal harmonization, VAT registration will be required for foreign event organisers who organise (among others) online cultural, artistic, scientific, educational, entertainment, sports or other similar events and exhibitions for Hungarian private individuals where participation takes place virtually. In the future, it will be necessary to charge Hungarian VAT in the mentioned cases, but at the same time, in the case of participants from other countries, the local VAT must be charged. It is easier for EU event organizers that they can fulfill their related obligations in the OSS system, however, for service providers from third countries (e.g. UK, US, etc.) it may also be necessary to use a Hungarian fiscal representative.
Since in the future - unlike the current regulation - the place of performance of all online (virtual) events will be the country of consumption, the new regulation will also require Hungarian online event organizers to reconsider the conditions if they provide this type of service to foreign participants.
The rules on admission to events with personal participation will remain unchanged: VAT must still be paid where the event is held.
When do we talk about event organisation?
In cases (such as cultural, artistic, scientific, educational, entertainment or sporting events) where participation is only possible with the purchase of a ticket. Company events are therefore excluded.
Factors affecting the treatment of VAT
Who is the recipient and where is established?
The VAT treatment may vary depending on whether the person taking part in the event is a taxpayer or a private individual, and whether they are established in the country or abroad (within or outside the European Union).
Will the event be held online or in person?
Currently, the rules governing events differ significantly between virtual events and events requiring a personal presence, so this also needs to be taken into account regarding VAT treatment.
Package of services or provision of separate services?
Depending on whether an event organizer sells a package to its customers that includes several services or sells separate services to the customers, different rules may apply to the deduction of the incurred VAT and the validation of costs.
Of course, the treatment of VAT here also depends on who the service is provided for.
Where is the place of performance?
- Events requiring personal presence
Under the VAT Directive and Hungarian rules, the place of performance for such events will be the place where the event is actually held.
Services provided to taxpayers are only considered to be provided at the place of actual consumption if the service (cultural, artistic, educational, scientific, etc.) relates only to the provision of access to certain events (e.g. exhibitions). In the case of services supplied to non-taxpayers, no such provision is made, if they are related to the mentioned activities, they are definitely performed in the state of physical fulfillment.
- Online events
Currently, the place of supply for virtual events is essentially linked to the country of the service provider, however, if the event is classified as an electronic service, the right of taxation is shifted at the place of consumption.
As of 1st of January 2025, the governing rules regarding the place of performance will change in the case of virtual events, because from this date on, the place of performance will be linked to the place of establishment of the user or customer of the service (in the absence of this, to the place of residence or usual place of residence).
In the future, the "place of performance" for online events will be the "place of residence" of the participant, regardless of whether they are a company or an individual.
Is a Hungarian tax number required if the foreign company organizes an event in Hungary? When do Hungarian event organizers have to register abroad?
As the place of performance of the event is in the Member State where the event is held, VAT registration is required in the following cases:
- business to business sales (B2B sales) - provided that reverse charge does not apply to the sales of tickets;
- sales to private individuals (Business to Customer sales - B2C sales).
- From 1st of January, 2025 the "residence" of the participant will be the place of performance for online events, regardless of whether they are a company or an individual.
The above is of course also true in the opposite direction, i.e. Hungarian event organizers may also subject to VAT registration abroad.
VAT registration, if not avoidable
It is important to note that VAT registration processes may vary from country to country and several documents may be requested by the relevant tax authorities.
Before commencing any activity abroad, we recommend that your Company informs itself about the current rules in the relevant country (VAT return deadlines, how to file VAT returns, similar obligations to those required for submitting reports in the Real Time Invoice Reporting system in the respective country, etc.).
2 July, 2024
VGD Hungary's compliance and tax consulting experts are at the disposal of event organizers to assist them in examining the relevant VAT rules, completing Hungarian VAT registration, submitting Hungarian VAT returns and simplifying administrative processes. With the help of our foreign partner offices, we are also available to assist you with information on foreign rules.
This newsletter provides general information and does not constitute advice.
