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V0332-22 21 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entidad de carácter social

VAT exemption for cultural services denied if effective management is remunerated

A foundation sought clarification on whether it could be classified as a social entity to apply VAT exemptions to a film festival. The Directorate General for Taxes (DGT) ruled that it does not meet the requirements because its Director General exercises effective management and makes economic decisions, thereby failing the condition that management positions must be unpaid.

The question raised

Whether the consulting entity can be considered an entity or establishment of a social nature for the purposes of the provisions of Article 20, paragraph three, of Law 37/1992, in order to apply the value added tax exemption provided in Article 20.One.14 of Law 37/1992.

The DGT's ruling

In order for a private entity of a social nature to enjoy the exemption provided in Article 20.One.14 of Law 37/1992, management and administration positions must be unpaid. If a person exercises effective management, making economic policy decisions and performing control functions, their position must be unpaid. In this case, as the general manager assumes effective management and has an interest in the results, the entity is not of a social nature.

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