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A PTA has enquired whether the transfer of funds from a local authority to finance an educational activity is subject to VAT. The DGT has ruled that, as there is no legal relationship involving the exchange of reciprocal benefits, the funds do not constitute consideration for a service.
This ruling clarifies that subsidies or contributions from public bodies to parent-teacher associations, intended to cover costs rather than as payment for services, fall outside the scope of VAT.
The tax team reviews your specific situation.
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