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V3658-20 29 December 2020 · SG de Impuestos sobre las Personas Jurídicas Criterion in force
IS · entidad parcialmente exenta

Sports club revenues may be exempt from IS if not economic activities and from VAT if social entity

A sports club asks about the taxation of its income (subsidies, membership fees, sponsorships, lottery) and deductibility of expenses. The DGT clarifies that in IS, income is exempt if derived from the social purpose and not economic activities, while in VAT, exemption of sports services depends on the entity being a social entity.

The question raised

Whether the various types of income of the consulting entity would be subject to, and where applicable, exempt from, Corporate Income Tax and Value Added Tax. Whether the expenses incurred by the consulting entity would be deductible for Corporate Income Tax purposes and whether the Value Added Tax incurred by the consulting entity would be deductible.

The DGT's ruling

In Corporate Income Tax, income is exempt if it arises from the corporate purpose and not from economic activities, with membership fees being exempt if they do not constitute consideration for services. In VAT, services provided to athletes may be exempt if the club is an entity of a social nature. Sponsorships are taxable advertising services, unless they are business collaboration agreements of general interest. The sale of lottery with a surcharge is a mixed service: the participation is exempt and the surcharge is subject to 21%.

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