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V1706-17 30 June 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · asistencia jurídica gratuita

Legal aid services are exempt from VAT due to their mandatory and compensatory nature

A lawyer inquired whether their legal aid services are subject to VAT. The DGT ruled that, following the reform of Law 1/1996, these services are not subject to the tax because the amounts received are compensatory in nature rather than being a consideration for services.

The question raised

Subjectivity of the operations under consultation to Value Added Tax.

The DGT's ruling

Since January 1, 2017, services provided by lawyers and court representatives within the framework of Law 1/1996 are not subject to VAT. This is because the new regulation establishes that the provision is mandatory and that the amounts received are of a compensatory nature. According to Article 78.Three.1º of the VAT Law, indemnities that do not constitute consideration are not part of the taxable base.

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