VAT treatment of educational services

For the assessment of the VAT treatment of educational services (such as teaching and training services), the first step is to determine the place of supply of those services for VAT purposes, based on their nature/classification, the VAT status/capacity of the recipient of the services as well as the way the services are provided (e.g. online). Following the determination of the place of supply, and should this be Greece, the next step would be to examine whether the services could benefit from the VAT exemption applicable to educational services. Should this be the case, even if the place of supply is Greece, the invoicing of those services would not be charged with Greek VAT and any input VAT (VAT on the expenses) will not be deductible for VAT purposes. If the place of supply is outside Greece, then the potential VAT obligations in such other state would need to be examined (equally to see if the services would be exempt there or if not, and what VAT compliance obligations would be created there).
Place of supply of the services – Main rules of relevance
Based on the provisions of article 14 par. 2 (a) of the Greek VAT Code, educational services provided to a taxable person acting in that capacity qualify as services falling under the general B2B rule and are subject to VAT at the place of establishment of the recipient of the services.
By way of derogation from the above, article 14 par. 8 of the Greek VAT Code stipulates that the granting of the right of access to educational events to a taxable person (B2B) shall be taxable at the place of the event, while article 14 par. 8a of the Greek VAT Code stipulates that both the right of access to an educational event as well as in general the provision of services relating to educational activities to a non-taxable person for VAT purposes (B2C) is taxable at the place of performance of this activity (i.e. where the activity takes place).
Based on the Guidelines resulting from the 97th Meeting (Sept. 2012) of the VAT Committee (Document B. taxud.c.1.(2013) 1512595-744 (which are also accepted by the Greek tax authorities through their reference in Circular E. 2071/2020 on treatment of educational services), the provision of education and training delivered by a teacher online or on an electronic network (i.e. a remote link) to a non-taxable person, is deemed to actually take place where the teacher is established, unless the teacher is shown to provide his services from a place other than that of his main place of business or of a fixed establishment, in which case the services hall be taxable in the country from which this service is actually provided.
Furthermore, based on a combination of article 14 par. 13, article 14a and article 14 par. 15 of the Greek VAT Code), the place of supply of electronically supplied services to a non-taxable recipient is in principle the place of establishment of the recipient, unless certain conditions are met which in derogation divert the place of taxation. The provisions are fairly complicated, but in essence they stipulate that if the provider is only established in one MS (e.g. Greece), the recipient is established/resides in a MS (not a third country) and the total value of the services to all non-taxable recipients in all MSs does not exceed 10.000 Euros for the current and the previous calendar year, the supply is taxable in the place of establishment of the provider (i.e. Greece), unless the provider chooses to be taxable at the place of establishment of the recipient. If the threshold of 10.000 euros is exceeded, the place of supply is the place of the recipient. Moreover, in case the services are supplied to a non-taxable recipient in a third country (non-EU), then in principle the place of supply is outside Greece, unless the services are used and enjoyed in Greece (which for electronically supplied services is considered to be met when the recipient is in Greece while the services are provided).
It should be noted that Annex VII of the VAT Code includes an indicative list of electronically supplied services, including the provision of distance learning.
With regard to the definition of electronically supplied services, in accordance with the provisions of article 7 par. 1 of Implementing Regulation (IR) 282/2011, electronically supplied services include services provided via the internet or an electronic network and the provision of which, due to their nature, is essentially automated and requires minimal human intervention, and is impossible without computer means. However, based on par. 3 of the same article, teaching services are not electronically supplied services, if the content of the courses is delivered by a teacher via the Internet or via an electronic network, i.e. via a remote connection.
In a nutshell:
- If the services are provided to taxable persons (B2B) and do not relate to the granting of the right to access to an educational event (e.g. seminar) with e.g. a registration fee, then they are taxable outside Greece, at the place of establishment of the recipient of the services (under the reverse charge mechanism). In this case the provider does not have any obligation in the other state.
- If the services are provided to taxable persons (B2B) but relate to the granting of the right of access to an educational event, then they are taxable at the place where the event takes place and the provider may need to examine the VAT treatment at that state (if exempt, if VAT obligations etc.).
- If the services are provided to non-taxable persons (B2C), and they do not qualify as electronically supplied services (i.e. not minimum human intervention etc.) then they are taxable at the place where the services actually take place; for the case of provision of education or training delivered by a teacher over the internet or electronic network (remote link), this is deemed to be where the teacher is established.
- If the services are provided to non-taxable persons (B2C) and qualify as electronically supplied services, then they are taxable in principle at the place of establishment of the recipient, unless the conditions mentioned above are met, in which case they may be taxable at the place of establishment of the provider (either obligatorily or optionally).
VAT exemption of educational services
Based on the provisions of article 22 par. 1 (ib) of the Greek VAT Code, the provision of educational services in general and the closely related supplies of goods and services provided by public schools or other persons recognized by the competent authority, as the case may be, are exempt from VAT, without the right to deduct input VAT on the relevant inputs (expenses).
It is noted that the concept of VAT-exempt education of the above provision includes pre-school education (nurseries and kindergartens), primary and secondary school education, university education, as well as vocational education, training or retraining/re-education by public or private profit or non-profit organizations, subject to the recognition of the training institution by a competent authority, if such a recognition requirement is required by the relevant legal framework. Moreover, training/educational services relating to electronic computers/IT etc. are also exempt, to the extent they provide vocational knowledge on computers/IT and not knowledge related to the use of a computer related to its sale or for recreational purposes. In contrast to vocational training/educational services, training/educational services for amateur or recreational purposes in general are not exempt (relevant Circulars POL. 10/1987, POL. 128299/1992, POL. 1071/1995, POL. 1285/1998, POL. 1041/2004, POL. 1137/2006).
When the relevant legal framework does not require the recognition of the teaching institution/person or when a competent authority for any such recognition is not set, then the competent authority to assess whether the teaching institution/person provides indeed educational services of an exempt nature is the Head of the competent tax office, taking primarily into account whether the services provided relate to educational services (including vocational education, training or re-training/re-education) and not of an amateur or recreational nature.
It is also noted that the exemption also covers intermediate persons that provide the qualifying educational services, such as in the case where the organizing body of the educational services assigns/delegates the execution of the educational services to another person (individual or legal entity).
Moreover, based on article 22 par. 1 (ig) of the Greek VAT Code, private lessons of all levels of education (excluding again lessons for the acquisition of knowledge of a recreational or amateur nature) are exempt from VAT, regardless of whether the delivery of the courses is done by organized companies-tuition centers in their classrooms or at home from teachers/caregivers.
The scope of the above exemption covers training/educational services whose place of supply is in Greece in application of the provisions of article 14 of the Greek VAT Code referred to above (under the place of supply rules).
Also, in the absence of a relevant restriction, the manner of providing the training/ educational services does not have an impact on the application of the exemption, i.e. if they are provided live in the presence of instructors and trainees or if they are provided remotely, via the internet, with real-time delivery of the course by the teacher or in the context of asynchronous (non-real time) education or in an automated way as electronically supplied education, provided, however, that the type of education falls within the meaning of the VAT-exempt education referred to above.
* The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.