MICE is back, VAT implications explained.

MICE plays a huge role in global business travel since every business industry is either hosting an event or attending one. But the question is, can my business claim back the VAT expenses incurred and how do I know if the invoices are actually compliant? Or can I use the invoices received in my local VAT return?

Services that can be reclaimed vary by country but normally include hotel, accommodation, exhibition costs, venue hire, equipment rental, entrance tickets, transportation and meals, these are all based on physical events.

MICE explained in more detail

The four sectors of MICE are outlined as follows; meetings, incentives, conferences and exhibitions. The goal behind these four pillars was that this was a way to bring professionals together, build connections, develop new ideas and encourage growth. MICE is generally for business events, events for leisure fall into a completely different category.

If your business deals with MICE, download the experts MICE specific VAT table.  

Importantly, all of these countries allow VAT recovery for foreign businesses that purchase MICE services directly from local suppliers (hotels, venues, exhibition organizers, restaurants, etc.). The trick question is, are the invoices received, meeting the requirements of various tax authorities. 

What changed during the Covid Pandemic?

Prior to Covid, a vast amount of these events were held face-to-face. Due to the pandemic, most organizers opted for hosting smaller gatherings or virtual events, these were the new norm. But can the VAT be reclaimed and what are the requirements for VAT Compliance?

Tax treatments of events 

The current EU VAT rules contain a special rule for an admission to an event; the rule states that admission to events is taxable in the country where the event takes place. So, yes for a physical event this rule is easy to apply and easier to identify the geographical location and apply the applicable VAT Rates. On the other hand, a virtual event has no connection to any specific location. 

As event organizers can be located in several countries, it is not easy to pinpoint which country should be considered as the place where the event takes place. Place of supply rule determines whether a supply is subject to VAT in that particular state. 

New EU Laws, and how do they affect my business?

After some investigation pertaining to the new EU laws, virtual events are deemed to be taxed based on the jurisdiction as each state has different views. The EU then proposed new rules which are still in the process of being adopted and implemented. This may only come into effect by member states by 2025. Under the new rules, virtual events might no longer be deemed to be supplied in the country where the event takes place, but rather in the country of the customer. This boils down to the tax treatment of digital services. It could be the case that no Tax will be charged in B2B transactions, however for B2C sales, event organizers may charge VAT as the rate of the customer’s country. We wait to see as this develops.

Get in touch with VAT IT for all your MICE related questions and concerns to ensure that your transactions are fully compliant with the relevant EU laws and regulations. VAT compliance only becomes practical when you have numerous jurisdictions to register within and complete a great deal of VAT returns. VAT Compliance can be quite overwhelming as different countries have different laws. VAT Recovery or VAT returns need to be done within a specific time frame to avoid penalties and as a business you need your VAT Compliance to be 100% accurate. Let the experts worry about VAT Compliance while you worry about your business.