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V0997-15 27 March 2015 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidades sin fines lucrativos

Service donations invalid for business collaboration agreements and may be subject to VAT

A foundation asks whether it can formalise a free service provision through a business collaboration agreement. The DGT responds that service provision is not a valid means of delivering economic aid under such agreements and examines VAT treatment.

The question raised

1) What would be the treatment for Value Added Tax purposes regarding the "donation of services", both for the entity and for the provider or collaborator.

The DGT's ruling

The financial aid from business collaboration agreements may consist of monetary amounts or in-kind contributions that generate expenses, but the provision of a service does not constitute a way to materialize such aid. Regarding VAT, services provided free of charge by entrepreneurs or professionals in favor of the entity are subject to the tax. The entrepreneur must charge the full amount of the tax via invoice. Operations carried out by those who do not hold the status of entrepreneurs or professionals shall not be subject to the tax.

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