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V3304-20 6 November 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · patrocinio publicitario

Advertising sponsorship contracts are subject to VAT, unlike collaboration agreements

A foundation inquired whether funds received under a sponsorship contract for a theatre festival were exempt from VAT. The DGT ruled that if the arrangement constitutes an advertising sponsorship contract, the transaction is subject to VAT at a rate of 21%.

The question raised

Application of the exemption provided for in Article 20.One.14º of the Value Added Tax Law.

The DGT's ruling

The advertising sponsorship contract, wherein the sponsored party undertakes to collaborate in the advertising of the sponsor, constitutes a provision of advertising services subject to VAT. However, if the entity adheres to Law 49/2002 through business collaboration agreements in activities of general interest, the amounts received do not constitute consideration for services and are not subject to the tax. Admissions and subscriptions for theatrical performances by cultural entities of a social nature do maintain their exemption.

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