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A company sought clarification on whether VAT should be applied to compensation received for the early termination of a commercial lease. The DGT ruled that, as the compensation does not constitute consideration for a service, it is not subject to VAT, and the original invoice must be rectified.
This ruling clarifies that indemnity payments for contract termination fall outside the scope of VAT, preventing incorrect tax applications on non-service related payments.
The tax team reviews your specific situation.
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