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V2703-20 3 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

Grants for social studies subject to VAT if they constitute consideration for a service

A cooperative sought clarification on whether a grant requested from a local council to conduct a study on prostitution would be subject to VAT. The Directorate-General for Taxes (DGT) ruled that, as the contribution appears to constitute consideration for consultancy and research services, it must be taxed.

The question raised

Whether the receipt of said grant or subsidy would be subject to Value Added Tax.

The DGT's ruling

The financial contribution from the public entity constitutes consideration for the provision of services if there is a direct link between the service provided and the amounts received. In this case, the grant appears to be the consideration for the social consultancy and research services performed for the City Council. Therefore, the transaction shall be subject to VAT at the rate of 21 percent.

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