B Law & Tax
30 August 2023

Tax advisor: The Directorate General of Taxes issues its opinion on how walking tours should be taxed

In the recent official consultation (V1886-23) issued on June 29, 2023, the Directorate General of Taxes has indicated that the entrance fee for the well-known “walking tours” will be subject to a taxation of 10% due to their character of live theatrical show. Likewise, the services offered by actors and technical personnel, when performed as part of their professional activity, will be considered to be linked to a theatrical production and, as they are provided to the organizer of the event, will also be subject to the reduced VAT rate of 10%.

The query raised revolved around the VAT category applicable to tickets for “walking tours”, which consist of sightseeing tours of emblematic places in a city. These tours differ from traditional guided tours in their theatrical approach, as they are conducted by actors or comedians who dramatize the experience throughout the duration of the tour. These performances recreate historical scenes related to the period or specific places in question.

Article 91.1.2.6 of the VAT Law establishes a reduced rate of 10% for admission to places such as theaters, museums and live cultural performances. Consequently, the entrance to the performance in question will be taxed at 10% if it can be considered as the entrance to a theater or a live cultural show.

As for the services provided by actors and technicians in this performance, Article 91.1.2.13 of the VAT Law also applies a rate of 10%. The DGT clarifies that technicians contributing to the performance of the show, under certain conditions, are also subject to this tax rate.

In order to apply the reduced rate, the services must be provided to producers of films suitable for projection in theaters and to those who organize theatrical or musical works. The organizer of a theatrical or musical play is considered to be the person who coordinates the human and material resources for its representation.

In accordance with the report of the Ministry of Culture and Sports of April 26, 2023, to determine VAT, the following will be included:

– Theatrical works: encompasses dramatic, dramatico-musical, choreographic, pantomimic and literary pieces adapted for the stage, with or without music and projected images. This covers theater, dance, circus, magic, comedy, puppetry, mime, video projections, among others.

– Musical works: covers sound creations, with or without text or projections. This includes music in various genres, concerts, singers, musicians and DJs.

The Directorate General of Taxation stresses that the place, the way of establishing compensation for the services and the objectives of the organizer do not affect the use of the reduced VAT rate. Therefore, the services offered by actors, comedians and technicians in their professional activity to the organizers of theatrical or musical works will be taxed at 10% VAT.

B Law & Tax International Tax & Legal Advisors.

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