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V3298-20 6 November 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeción

Donations providing commercial discounts on electricity supply are subject to VAT

An electricity company has requested a ruling on whether received donations are subject to VAT or exempt. The DGT has determined that if a donation is voluntary and lacks a commercial connection, it is not subject to VAT; however, if the payment grants a right to reduced tariffs, it constitutes a transaction subject to the tax.

The question raised

Liability for Value Added Tax purposes of the described donations and, where applicable, the possible application of the exemption provided for in Article 20.One.12 of Law 37/1992.

The DGT's ruling

Donations from third parties without a commercial link are not transactions subject to tax as they do not constitute consideration for services. However, if the donation is a fixed amount that grants the client the right to advantageous commercial conditions (discounts), it is understood that a direct link exists and two operations occur: the assignment of the right to a discount and the electricity supply. These donations cannot benefit from the exemption for non-profit entities because they satisfy a private interest and not the collective interest of the members.

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