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V2172-22 17 October 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entidad de carácter social

The remuneration of the general manager exercising effective management prevents the VAT exemption on cultural services

A non-profit foundation inquired whether it could be considered a social entity to apply the VAT exemption to its cultural services. The DGT responds that it cannot, because its general manager exercises effective management and makes economic and control decisions.

The question raised

Question posed: Whether the consulting entity can be considered an entity or establishment of a social nature for the purposes of the provisions of Article 20, paragraph three, of Law 37/1992, in order to apply the value added tax exemption provided for in Article 20.One.14 of Law 37/1992.

The DGT's ruling

For an entity to be of a social nature and apply the exemption under Article 20.One.14 of Law 37/1992, management positions must be unpaid. If the general manager assumes effective management, the adoption of political and economic decisions, and superior control functions, the entity does not meet the social nature requirement. In this case, the remuneration of the director exercising such effective management prevents the application of the exemption.

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