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A local council has enquired whether a subsidy intended to cover the operating deficit of a sports service managed by a third party is subject to VAT. The Directorate-General for Taxes (DGT) has ruled that such a contribution constitutes part of the consideration for the services and must be taxed.
This ruling clarifies that any financial contribution aimed at covering operational losses in public service contracts is considered part of the service price, thereby increasing the VAT liability for the provider.
The tax team reviews your specific situation.
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