Online trainers must apply VAT if their service is automated

The nature of training provided via the internet determines the tax treatment applicable to Value Added Tax (VAT). Not all online teaching services enjoy VAT exemption, and the distinction lies in the degree of human intervention and the structure of the service provided.

What the DGT has ruled

The Directorate General of Taxes (DGT) has delimited the boundary between exempt educational services and services supplied electronically. According to the administrative criteria, a service is considered supplied electronically when it is automated and requires minimal human intervention, as occurs with access to recorded content or the use of digital self-service platforms.

Conversely, it is considered an educational service when the electronic network functions solely as the means of communication between the teacher and the student. For this latter type of service to qualify for VAT exemption, additional requirements must be met: the subjects taught must be part of official curricula, and the provider must not be subject to registration in the business activity tariffs of the Economic Activities Tax (IAE).

What it means for you

If you are an individual providing classes or training online, the classification of your activity is decisive for your invoicing. If your business model is based on selling pre-recorded courses or providing access to a platform where the student consumes content without direct interaction, you will be providing an electronically supplied service, which is subject to VAT.

If your activity consists of private lessons where technology is merely the communication channel, you could apply the exemption, provided that you strictly comply with the regulations regarding curricula and the business activity regime.

What you should do

It is necessary to analyze the actual operation of your training service. You must determine if there is an automation that shifts the figure from an educational service toward an electronically supplied service. Correct classification will avoid tax contingencies arising from an erroneous application of the VAT exemption to services that, due to their digital nature, must be taxed.