VAT on donated goods

The donation of goods to non-profit entities has generated a specific problem in relation to VAT taxation for both the donor and the entity receiving the donation.

The detriment derived from VAT taxation arising from donations of goods has been addressed by the new provisions contained in Final Provision 3 of Law 7/2022, which amends the regulations with the aim of facilitating donations of goods to entities covered by Law 49/2002, on the tax regime for non-profit organisations and tax incentives for patronage.

The first amendment affects the taxable amount of donations for VAT purposes. It is expressly mentioned that it refers to the value of the goods at the time of their delivery, considering the alterations in value as a consequence of their use, deterioration, obsolescence, debasement, revaluation or any other cause. From this it will be presumed that a total deterioration of the goods supplied to the entities referred to has taken place provided that the goods are used for their general interest purposes, i.e. the taxable amount for VAT purposes will be deemed to be zero.

The second refers to the tax rate applicable to the supply of such goods as a donation, which will be subject to a rate of 0%. It follows that the donor of the goods will not be limited in the deductibility of VAT on the acquisition of the donated goods, when the entities covered by Law 49/2002 use them for their social interest purposes.

This regulation has been applicable since 10 April, when it came into force.