VAT and the metaverse: taxing virtual events

“Metaverse” is the latest buzzword spreading across the internet. The idea of ​​an interconnected 3D virtual world where users can work, play and socialize is exciting to many. Although the term “metavers” was originally coined by Neal Stephenson in his 1992 novel “Snow Crash”, it sparked huge public interest after Facebook rebranded itself as “Meta” in October 2021. Shortly after, de many tech companies have started discussing the apparent potential the metaverse holds for their businesses.

The metaverse has enormous potential to change the way online meetings and virtual events are conducted. Due to its highly immersive and extensible nature, the Metaverse could be used to host events of any size and type, from small office meetings to large-scale conferences. In the future, we may choose to abandon traditional conferencing platforms in favor of virtual environments where we interact with the avatars of other participants.

How does value added tax fit into this virtual reality? Given the growing popularity of metaverse events, the question inevitably arises as to whether tickets for virtual events should receive the same tax treatment as those for their physical counterparts, or whether they should be treated like any other. digital service.

Digital service or virtual event?

European VAT legislation defines digital services (“services supplied electronically”) as services supplied over the Internet or an electronic network, the nature of which makes their supply essentially automated, involving minimal human intervention and impossible in the absence information technology.

Online events that require substantial, real-time human involvement from organizers (e.g., a virtual conference with live sessions) are unlikely to meet this definition. An example of a virtual activity that could qualify as a digital service is an online exhibition where the organizer simply allows virtual users to enter a particular virtual location but does not interact with them in real time. The fact that such an event allows real-time human interaction between event participants is irrelevant since only the involvement on the supplier side is taken into account for VAT purposes.

European VAT legislation contains a special rule for admission to events. As this rule was originally designed for physical events, the question arises whether it can also apply to an event taking place entirely in the metaverse. In other words, can virtual activities be considered an event for VAT purposes?

European VAT legislation does not define the term “event”. Fortunately, guidance on this concept has been provided by the Court of Justice of the European Union (CJEU). In Srf konsulterna (C-647/17), the CJEU ruled that “admission to events” was not equivalent to the right to enter a place, but rather, this term covers the right to participate in an activity, such as a course or seminar. In other words, an event does not require access to a specific physical location; it is participation that counts.

In her opinion on the same case, General Counsel Eleanor Sharpston pointed to a few other features of events – pre-planned, indivisible activities that take place over a short period of time and relate to a predefined topic. This means that metaverse events can be considered events for EU VAT purposes if they are short, uninterrupted and planned in advance.

Having established that metaverse activities can be considered either events or digital services from a VAT perspective, let’s take a closer look at the tax treatment of these two categories.

Tax treatment of digital services

Under European VAT legislation, digital services are taxable in the country where the customer is established, has his permanent address or usually resides. If the customer provides the seller with his VAT identification number (business-to-business, B2B, sale), the seller does not need to charge VAT on the transaction because the reverse charge mechanism will apply. This means that the customer must take into account the VAT on the sale.

If digital services are purchased for private purposes (business-to-consumer, B2C, sale), the seller must establish each customer’s location to charge the correct tax rate. This could be done on the basis of several indicators, such as billing address, bank details or IP address.

Tax treatment of events

Current EU VAT rules contain a special rule for admission to events which states that admission to events is taxable in the country where the event takes place. While this rule may be easily applicable in the physical world where the location of the event may be pinned to a particular geographic location, it does not seem well suited to virtual reality which has no connection to a particular territory.

As event organizers may be located in multiple countries, it can be difficult to determine which of them should be considered the location of the event.

The EU has realized that the fact that virtual events are taxed in the same way as physical events creates considerable legal uncertainty for event organizers and has enacted new rules which will have to be implemented by member states. 2025.

Under the new rules, virtual events will no longer be deemed to be provided in the country where the event takes place, but still in the country of the customer: they will thus be broadly aligned with the tax treatment of digital services. No tax will be charged in B2B transactions, while in B2C sales, event organizers will charge tax at the rate of the customer country.


The new rules are a welcome development for businesses hosting virtual events. Once they take effect, it will no longer be necessary to engage in a complex exercise of determining an actual location where a virtual event is taking place. Entrance fees to virtual events will be subject to tax in the client country, which is already common practice for all digital services.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of organizations with which the author is affiliated.

This article does not necessarily reflect the views of the Bureau of National Affairs, Inc., publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Aleksandra Bal is Head of Indirect Tax Technology and Operations at Stripe.

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