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V1531-22 27 June 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · atención residencial

4% VAT rate applicable to residential care if dependency aid covers more than 10% of the basic service

A care home has queried whether the 4% reduced VAT rate should apply when dependency aid exceeds 10% of the basic care service price. The DGT has ruled that the 4% rate is applicable if the linked financial benefit covers more than 10% of the price of the basic residential care service, excluding any additional services.

The question raised

Whether the 4 percent rate applies to the invoice for services provided to persons who have been granted a "dependency grant" linked to the service, the amount of which exceeds 10 percent of the amount for the care and assistance services received, without taking into account other amounts for improvements due to room characteristics, hairdressing, podiatry, etc.

The DGT's ruling

The 4% rate applies to residential care services when there is a linked economic benefit that covers more than 10% of the price of the basic care service. This calculation must not include other amounts for additional services such as hairdressing or podiatry. If a grant is recognized with retroactive effects, the company must rectify the excess charged amounts through corrective invoices and regularize its tax situation.

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