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V1107-18 27 April 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · contraprestación

Payments by a local council for musical band services are subject to VAT

A non-profit entity inquired whether the funds received from a local council for performing as a musical band constitute a grant. The DGT ruled that these payments are consideration for services rendered and are therefore subject to VAT.

The question raised

Whether the amount received by the applicant can be considered a subsidy.

The DGT's ruling

The payment made by the city council constitutes the consideration for the musical services provided by the entity. As there is a direct relationship between the payment and the performance, it is not a subsidy, but rather an onerous operation. Therefore, the services are subject to and not exempt from VAT at the general rate.

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