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A religious congregation enquired whether a severance payment, agreed as part of the cost of a catering service, should be subject to VAT. The DGT ruled that, as it forms part of the agreed remuneration, it constitutes consideration for the service and must be included in the taxable amount.
This ruling clarifies that any component of a total price, including compensation for dismissal, is considered part of the consideration for a service if it is part of the agreed total amount, thereby increasing the VAT liability.
The tax team reviews your specific situation.
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