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Place of supply of other services under Article 25: physical location, transport-related services and split performance

Dariba Tax Team·

Article 21 of the Common VAT Agreement provides that the place of supply for certain services shall be the place of actual performance. Those services are restaurant, hotel and catering services; cultural, artistic, sport, educational and recreational Services; and services linked to transported Goods supplied from a taxable Supplier residing in a Member State to a non-taxable Customer residing in another Member State. Article 18 of the Agreement separately places the supply of transportation of Goods and passengers and related Services where transportation begins. Article 25 of the Implementing Regulations, headed "Place of Supply - Other Services", gives content to these rules and adds a rule on services performed partly inside and partly outside the Kingdom.

Events and education in a physical location

Article 25(1) provides that cultural, artistic, sport, educational and entertainment services include the admission to any event taking place in a physical location, or the provision of educational services where these are provided in a physical location. The physical location is the place in which the services are offered.

A conference, concert or sporting event held in the Kingdom is therefore performed in the Kingdom, and admission to it is supplied in the Kingdom. The same applies to a training course delivered in a classroom in the Kingdom. The rule is framed by reference to a physical location; services delivered electronically fall to be considered under Article 24 of the Regulations and Article 20 of the Agreement.

Services relating to transportation

Article 25(2) provides that the supply of services relating to Goods or passenger transportation includes:

This list identifies the "related Services" that the Agreement treats together with transportation for place-of-supply purposes. Whether any such service is zero-rated is a separate question governed by the zero-rating provisions of the Regulations, and is not decided by Article 25.

Performance partly inside and partly outside the Kingdom

Article 25(3) provides that where the place of Supply of a service is determined under the Agreement by the place of performance, and performance of part of the service takes place within the Kingdom and another part outside the Kingdom, the value of the service shall be split accordingly between the part taking place within the Kingdom and the part taking place outside the Kingdom.

Article 25(4) adds that services which are performed outside the Kingdom are not, for the purposes of this Article, viewed to be performed in the Kingdom for the purposes of applying the Agreement and the Law.

The apportionment requirement is mandatory where it applies. A supplier delivering an event-based programme with sessions both in the Kingdom and abroad should split the consideration between the two parts on a basis it can support, and account for tax in the Kingdom only on the part performed in the Kingdom.

Relationship with the general principles

Articles 18 and 21 of the Agreement are Special Cases. Under Article 22 of the Regulations they take precedence over the general principles in Articles 15 and 16 of the Agreement. Where a service is neither a Special Case nor covered by another specific rule, the place of supply is determined under Article 15 (the Place of Residence of the Supplier) or Article 16 (the Place of Residence of a Taxable Customer).

Instruments relied on: VAT Law, Article 13; Common VAT Agreement, Articles 15, 16, 18, 20 and 21; Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Articles 22, 24 and 25 (none was amended by ZATCA Board Resolution No. (01-06-24) dated 17/05/1446H, published in the Official Gazette, Umm Al-Qura issue 5082, on 18 April 2025). The Arabic text prevails.

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