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V0609-16 15 February 2016 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidad sin ánimo de lucro

Non-profit associations may qualify for partial Corporation Tax and VAT exemptions depending on their activities

A non-profit association has requested clarification on whether its activities (cultural videos, training, and services for third parties) are exempt from Corporation Tax and VAT. The Directorate General for Taxes (DGT) ruled that while there is no total exemption from Corporation Tax, a partial exemption may apply. Regarding VAT, exemption will depend on whether the services are classified as social assistance, educational, or electronic services.

The question raised

Whether this entity is exempt for VAT and Corporate Income Tax purposes.

The DGT's ruling

In Corporate Income Tax, the association is a taxpayer and does not have a total exemption, but may opt for partial exemption if it is of public utility or through the regime of Law 49/2002. In VAT, social assistance services may be exempt if they meet the requirements of an entity of a social nature. Teaching is exempt if it is an educational service that transmits knowledge and is not merely recreational, provided it is carried out by authorized entities. However, if training services are considered to be provided by electronic means (automated without significant human intervention), they shall not enjoy exemption and shall be taxed at the general rate.

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