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A non-profit association seeks clarification on whether it can deduct VAT on expenses for a free music festival that receives subsidies and generates income from advertising and catering. The Directorate General for Taxes (DGT) rules that the entity is considered a taxable person and that deductibility will depend on whether the activities constitute differentiated sectors or if the pro rata rule applies.
This ruling clarifies the VAT status of non-profit organisations managing events with mixed income streams, affecting how they recover input VAT.
The tax team reviews your specific situation.
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