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V2001-18 4 July 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

Subsidies to cover public sports service deficits are included in the VAT taxable amount

A local council has enquired whether a subsidy intended to cover the operating deficit of a sports service managed by a third party is subject to VAT. The Directorate-General for Taxes (DGT) has ruled that such a contribution constitutes part of the consideration for the services and must be taxed.

The question raised

Subject to Value Added Tax of the aforementioned subsidies.

The DGT's ruling

Contributions to cover a service deficit are not considered exempt monetary contributions if they do not meet the requirements of letters a) and b) of Article 78.Two.3 of Law 37/1992. As there is a direct link between the subsidy and the provision of the service, this form constitutes part of the total consideration. Therefore, the successful bidder must charge the corresponding VAT on said amount.

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