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A mixed-capital entity enquired whether European and provincial grants for a water digitisation project were subject to VAT. The DGT ruled that they are not, as there is no consideration or link to the price, and that project purchases are deductible if allocated to taxable transactions.
This ruling clarifies the VAT treatment of public grants for environmental projects, confirming that non-reciprocal subsidies do not constitute taxable consideration, while maintaining the right to input tax deduction for related expenses.
The tax team reviews your specific situation.
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