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V2685-19 1 October 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · cesión de uso

Local councils must charge VAT on the leasing of municipal theatres to non-profit organisations

A local council has requested clarification on whether VAT should be applied when charging a non-profit organisation, which benefits from exemptions, for the use of a municipal theatre. The Directorate General for Taxes (DGT) has ruled that the lease is subject to VAT and must be charged regardless of the recipient entity's nature.

The question raised

Whether the city council must charge the tax for the transfer of the theater when the recipient is a non-profit entity that applies the aforementioned exemption.

The DGT's ruling

The transfer of use of a municipal theater carried out by a city council constitutes a supply of services subject to VAT. The exemption provided for in Article 20.One.14 of Law 37/1992 applies to supplies made by public law or cultural entities, but not to supplies of which such entities are the recipients. Therefore, the city council must charge the tax on the invoice.

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