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A City Council consulted whether school transport services and payments to the contractor were subject to VAT. The DGT ruled that the portion funded by users through public fees is subject to 10% VAT, whereas public contributions for services that do not distort competition are not.
This ruling clarifies the VAT treatment for school transport services, distinguishing between user-paid fees (taxable at a reduced rate) and public subsidies (exempt/out of scope), which directly affects the right to VAT deduction for providers.
The tax team reviews your specific situation.
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