Prepared by Davide Accorsi e Giacomo Merenda
With ruling reply 409/2022, published on 4 August, the Italian Revenue Agency clarified that the provision of training courses in “online” mode are VAT-relevant where the customer is established or resident, regardless of whether the customer is a taxable person or a private individual.
In the case being questioned, the Applicant is a company that provides services in the field of training by means of courses delivered in virtual mode (via “Zoom” or “Adobe Connect” platform) by teachers connected in real time mostly remotely (i.e., from their home or office located in European Union Member States other than Italy or outside the European Union). It is specified that this modality allows interaction between course participants and lecturers via the same streaming platform, as well as access to the e-learning platform for consulting the course materials attended by participants and for sending further specific questions to the course teachers. Participants can be either taxable persons (B2B) or final consumers (B2C), resident in European Union Member States other than Italy or outside the European Union.
Given the above, first of all, as regards the provision of training courses rendered to taxable persons (B2B), the Applicant requested the Revenue Agency to clarify whether it can be applied: (i) the place of supply for the provision of general services, pursuant to Article 7-ter(1)(a) of Presidential Decree 633/1972, according to which the place of establishment of the customer is relevant, or (ii) the specific place of supply for admission to events, pursuant to Article 7-quinquies(1)(b) of the same decree [1], for which the place where the events are held is relevant.
Secondly, with regard to the provision of the above-mentioned courses to non-taxable persons (B2C), assuming the application of Article 7-quinquies(1)(a) of Presidential Decree 633/1972 [2], the tax authorities were asked to rule on the criterion to be used to establish the place where the service is “physically carried out”, due to the fact that there is no physical place where the service is performed and used.
Firstly, the Revenue Agency specifies that the services at issue cannot be included among the services rendered electronically, since the electronic tool used (i.e.: the “Zoom” or “Adobe Connect” platform) is only a means to access that service.
With reference to the first question, the tax authorities cite Article 32, Regulation 282/2011/EC [3], which, in its first paragraph, states that “services in respect of admission to cultural, artistic, sporting, scientific, educational, entertainment or similar events as referred to in Article 53 of Directive 2006/112/EC shall include the supply of services of which the essential characteristics are the granting of the right of admission to an event in exchange for a ticket or payment, including payment in the form of a subscription, a season ticket or a periodic fee.“. Furthermore, the Revenue Agency points out that the aforementioned Article, in the following paragraph, specifies that: “paragraph 1 shall apply in particular to the right of admission to educational and scientific events such as conferences and seminars”. On the basis of the above, the Revenue Agency distinguishes between training services, on the one hand, and conferences and seminars, on the other hand, clarifying that this distinction is not always easy and must be made on a case-by-case basis on the basis of the concrete characteristics of the service provided.
To this end, the tax authorities, citing the principles expressed by the Court of Justice of the European Union in the case C-647/17 [4], clarifies that access to an event occurs in the case of a single but composite performance, the essential elements of which have a close physical connection with the place where the event takes place [5].
In view of the considerations above and in the absence of a place physically and univocally identifiable as the place where the courses subject to the ruling request were physically held, the Revenue Agency clarifies that the provision of courses to taxable persons (B2B) is configured as a supply of services relating to educational/cultural activities, and as such, subject to the general place of supply rule provided by Article 7-ter(1)(a) of Presidential Decree 633/1972, for which the place of establishment of the customer is relevant, since, in the case of virtual participation, the notion of access loses its materiality (understood as the right to physically access the place where the event takes place).
In support of its clarification, the Revenue Agency also cites Article 1 of the Directive 2022/542/UE, to be implemented by the Member States of the European Union by December 2024, which added an additional paragraph to the aforementioned Article 53, stipulating that the place of supply related to the admission to events does not apply in cases where attendance at such events is only virtual.
With reference to the second question, the Revenue Agency clarifies that what is relevant for the place of supply for services subject to the ruling request rendered to final consumers (B2C) is the place where the final consumer is established, has his permanent address or usually resides (i.e. the place where “the same activities are physically carried out there” within the meaning of Article 7-quinquies(1)(a) of Presidential Decree 633/1972, which implements Article 54 of Directive 2006/112/EC into Italian law.
In support of the aforementioned thesis, the Revenue Agency has deemed it appropriate to refer to the guidelines contained in Working Paper 1013/2021 of the VAT Committee, which considers that, in the case of virtual activities/events falling under the discipline of the aforementioned Article 54, the place of supply of such activities should coincide with the place where the final consumer is established and uses the service.
Moreover, in support of its conclusions, the Revenue Agency cites the changes made by the aforementioned Directive 2022/542/EU [6] to the said Article 54, Directive 2006/112/EC, which stipulate that “where the services and ancillary services relate to activities which are streamed or otherwise made virtually available, the place of supply shall, however, be the place where the non-taxable person is established, has his permanent address or usually resides”.
The clarifications provided with the ruling reply 409/2022, which is the subject of this newsalert, seem to be in line with the principles expressed in the previous ruling reply 353/2022 of 28 last June, concerning the place of supply for VAT purposes of services of virtual (“online“) admission to a scientific event physically carried out in Italy. In this case, the Revenue Agency clarified that such services are to be considered VAT-relevant in Italy pursuant to Article 7-quinquies(1)(a) and (b) of Presidential Decree 633/1972, depending on customer status (private or taxable person).
In this regard, it is clarified that the mode of remote participation, in this case, does not entail the use of a service different from that offered to those who participate in the event in person, given that each participant, albeit in a different manner, has the same opportunity to attend and participate in it, with the attached possibility for each user to interact with the speakers.[1] According to Article 7-quinquies(1)(b) of Presidential Decree 633/1972, “services for access to cultural, artistic, sports, scientific, educational, recreational and similar events, including fairs and exhibitions, as well as ancillary services related to access, rendered to taxable persons are considered to be performed in the territory of the State when the events themselves are held there”.
[1] According to Article 7-quinquies(1)(b) of Presidential Decree 633/1972 [2], “services for access to cultural, artistic, sports, scientific, educational, recreational and similar events, including fairs and exhibitions, as well as ancillary services related to access, rendered to taxable persons are considered to be performed in the territory of the State when the events themselves are held there”.
[2] According to the aforementioned provision, “the supply of services relating to cultural, artistic, sporting, scientific, educational, recreational and similar activities, including fairs and exhibitions, the supply of services of the organisers of such activities, as well as the supply of services ancillary to the above services rendered to customers who are not taxable persons, shall be deemed to have been effected within the territory of the State when the same activities are physically carried out there. The provision of the preceding sentence shall also apply to the supply of services for access to cultural, artistic, sporting, scientific, educational, recreational and similar events, as well as to ancillary services relating thereto”.
[3] The article in question clarifies certain aspects of Article 53, Directive 2006/112/EC, implemented in Italy by the aforementioned Article 7-quinquies(1)(b) of Presidential Decree 633/1972.
[4] The case concerns a training activity in the field of accounting and business management, lasting five days, provided by a Swedish company to taxable persons after registration and payment of a fee. The Court of Justice of the European Union held that, in order to determine the place of supply for VAT purposes of such services, it is appropriate to refer to the rule set out in Article 53, Directive 2006/112/EC (implemented in Italy by Article 7-quinquies(1)(b) of Presidential Decree 633/1972) concerning admission to events.
[5] These elements, in the case decided by the Court, are the teacher’s contribution, the simultaneous presence of teachers and participants in the same place and the ancillary services consumed. [1] As already mentioned, these changes must be implemented by the EU Member States by December 2024.
[6] As already mentioned, these changes must be implemented by the EU Member States by December 2024.
Let’s Talk
For a deeper discussion, please contact:
Tax Director