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Colombia concert ruling raises virtual VAT conundrum

Colombia’s tax authorities have issued a clarification on whether an online concert counts as a public performing arts performance and is thus eligible for a VAT exemption.

The DIAN clarified that a virtual performance does not meet the criteria for the exemption. That’s because virtual performances don’t  meet all the criteria for a public performance under the regulations. Specifically, the regulations define a public performance, in part, as a meeting of people in a defined space.

When is an event not an event?

The DIAN note raises an interesting general question about the distinction between real and virtual events from a VAT perspective. 

We’ve previously raised the question in terms of VAT regulations governing events and conferences.

Over the course of the last year, many events organisers pivoted to virtual events. In many senses, these events resemble their ‘real-world’ counterparts. Delegates register and buy tickets for the events. They then ‘gather’ virtually at an appointed time to participate. Participation may even be interactive, involving questions and answers conducted via remote conferencing technology.

However, from a VAT perspective, are virtual events actually considered events or are they digital services? The distinction is important because the VAT treatment will be potentially very different in either case. 

Further, if the event is considered a digital service from a VAT perspective, when is it a form of online training? And does that make a difference depending on where delegates are located?

How do you tax digital services?

More broadly, the question of how to tax digital services companies remains a contentious issue. While an increasing number of countries impose Digital Services VAT, much disagreement remains about the proper framework for taxing digital services companies’ income.   

VAT specialists with a global view

In an unpredictable and rapidly changing economy, VAT regulations are dynamic and occasionally ambiguous.

As global VAT specialists, Vatglobal carefully analyses VAT regulations across industries to ensure that we can provide clients with accurate, up-to-date VAT information. 

Our proprietary cloud-based VAT compliance technology makes it easy to adapt as your VAT compliance obligations change. 

 

 

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