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V1690-24 10 July 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · subvención vinculada al precio

Subsidies received for forestry activity are not subject to VAT if they are not linked to the price

An association of forest owners inquires whether the subsidies received for their activity and the sale of products are subject to VAT. The DGT responds that the amounts are not subject to the tax as they do not constitute consideration nor are they subsidies linked to the price.

The question raised

Question posed: Whether the monetary transfers received by the inquirer for the development of their activity from the Public Administration would be subject to Value Added Tax. Deductibility of the tax amounts incurred in their activity.

The DGT's ruling

The amounts received are not subject to VAT if there is no legal relationship of reciprocal benefits nor do they meet the requirements of a subsidy linked to the price. For a subsidy to be linked to the price, it must have been paid to perform a specific service, the acquirer must obtain an advantage, and the amount must be determinable. Regarding deduction, the tax amounts incurred shall be deductible if they are used exclusively for transactions that are subject and not exempt.

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