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V1761-20 3 June 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · atención residencial

4% VAT rate applies to residential care services if using contracted places or administrative contract pricing

A geriatric residence owner inquired whether their residential services could be taxed at the reduced rate of 4%. The DGT ruled that this rate only applies if the services are provided through contracted places or via prices set by the Administration under an administrative contract.

The question raised

Whether the Value Added Tax rate provided for in Article 91.Two.2.3º of Law 37/1992 would apply to the provision of residential services carried out by the applicant to said users.

The DGT's ruling

The 4% rate applies to residential care services defined in Law 39/2006 provided they are provided in contracted places or through prices derived from an awarded administrative contract. In order to comply with the price control requirement, the consideration must be predetermined by the Administration in the public service management contract. If the service is provided under a non-contracted private regime with a freely agreed price, the 10% rate shall apply. Likewise, the 4% rate applies if there is a linked economic provision covering more than 10% of the service price.

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