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V0177-26 30 January 2026 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

VAT deduction depends on whether foundation conducts remunerated or gratuitous operations

A foundation asks whether it can deduct VAT on purchases for cooperation projects funded by donations. The DGT responds that deduction is only allowed if the foundation acts as a trader or professional carrying out remunerated operations, not as a final consumer in gratuitous transactions.

The question raised

Whether it may deduct the Value Added Tax amounts incurred in purchases and contracts related to the execution of said projects.

The DGT's ruling

The status of entrepreneur or professional for the purpose of deducting tax amounts requires performing activities on a continuous basis and for consideration, assuming the risk and venture. If the foundation only performs operations free of charge or with merely symbolic consideration, it is not an entrepreneur for VAT purposes and acts as a final consumer. For a subsidy to be considered linked to the price and form part of the taxable base, there must exist a relationship of proportionality between the subsidy and the reduction in the price of the good or service.

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