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V2365-14 10 September 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · subvenciones vinculadas al precio

Third-party advertising contributions subject to VAT if they constitute consideration or price-linked subsidies

A non-profit business association has requested a ruling regarding the VAT liability of advertising contributions and the deductibility of related expenses. The DGT has determined that third-party contributions are subject to VAT if they constitute consideration or subsidies linked to the price, and that the deductibility of expenses will depend on the application of the pro rata rule or split sectors.

The question raised

Taxability of contributions from third parties for advertising campaigns. Deductibility of the tax amounts borne in the expense invoices of said campaign and in the works of the design program, as well as in current management expenses.

The DGT's ruling

Contributions from third parties for advertising campaigns are subject to VAT when they act as consideration or as subsidies directly linked to the price. Subsidies are considered linked to the price if they are established based on the volume of services and are determined prior to the transaction. The deductibility of the input tax paid on expenses will depend on whether they are used in taxable and non-exempt operations, and the pro rata rule or the regime of differentiated sectors must be applied as appropriate.

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