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V2211-18 25 July 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeción al impuesto

Local authorities must declare VAT on bullring operations and apply pro rata for deductions

A local authority has requested clarification regarding its obligation to declare VAT and deduct the tax for the operation of a bullring involving both taxable and non-taxable activities. The Directorate-General for Taxes (DGT) ruled that the operating activity constitutes a business activity subject to VAT, and that the authority must comply with declaration and deduction obligations using a reasonable imputation criterion.

The question raised

Obligation to file a VAT return for this activity and the deduction of the tax paid.

The DGT's ruling

The operation of a bullring by a City Council is a business activity subject to VAT, with tickets taxed at 10% and advertising at 21%. As it also carries out operations that are not subject to tax due to their public nature, the City Council must apply a reasonable and homogeneous imputation criterion for the deduction of input VAT. VAT on goods or services intended exclusively for non-taxable operations shall not be deductible.

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