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A local council has requested clarification on whether leasing residential properties, intended for free transfer to families at risk of social exclusion, is exempt from VAT. The Directorate General for Taxes (DGT) ruled that if the council does not act as a business entity and the transfer is made without consideration, the transaction is exempt.
This ruling provides legal certainty for local authorities seeking to implement social housing programmes without incurring VAT costs, provided they do not operate as commercial entities.
The tax team reviews your specific situation.
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