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Donation dilemma
Key points
- Questions to consider when deciding whether a donation is subject to VAT.
- If a donor expects particular benefits the payment is likely to be standard rated.
- Importance of considering the wording of sponsorship.
- The Court of Justice of the EU decision in European Commission v Austria.
- A ‘minimum donation’ is not a donation for VAT purposes.
In the past few weeks I have found myself disagreeing with two VAT consultants on the same issue. The question is simple: what exactly is a donation that escapes the clutches of the nation’s favourite tax because the payment made by the ‘donor’ is not relevant to a taxable supply of goods or services? The irony is that one of the consultants I disagreed with was myself. But in a further twist to the tale a recent Court of Justice of the EU ruling might have shed some light on this tricky issue.
Basic rules
About 12 months...
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