Are your services exempt from VAT? Teaching, health and similar

Key rules

• Exempt means no IVA: If your services are exempt, you charge no IVA to clients.
• No recovery: With only exempt work, you cannot deduct the IVA you pay on your costs.
• Mixed work: If you do both exempt and taxed work, you deduct a share using the prorrata rules.
• Outside the curriculum: Courses outside the school or university curriculum are generally taxed at 21%.

The short answer

Some health and teaching services are exempt from IVA. If your only activity is exempt, you charge no IVA to clients, and you cannot recover the IVA you pay on your own costs. Whether you qualify depends on the detailed conditions below.

Health services

Your work is exempt if all of these apply:

• You hold the qualification required to practise, for example as a doctor, dentist, psychologist, physiotherapist or nurse.
• You are registered with the relevant professional body.
• The service is health care for a person: diagnosis, treatment or prevention.

Cosmetic or non-therapeutic work is not exempt. Expert reports and similar work are not exempt either.

Teaching

Teaching is exempt in two cases:

• Official education. This is regulated education given at a recognised centre.
• Private classes. You give them as an individual, on subjects in the school or university curriculum, directly to pupils and under your own name.

Courses outside the curriculum are generally taxed at the standard 21% rate. That includes leisure courses, languages taught in academies not recognised by the state, and training for companies.

Other exempt services

Some other services are also exempt, such as sports services to individuals by non-profit bodies, cultural services by public bodies and certain non-profits, and insurance, financial and banking services.

What exemption means for the IVA you pay

If all your work is exempt, you cannot deduct the IVA on your purchases. It becomes a cost of your activity, and you can deduct it for income tax purposes.

If you do both exempt and taxed work, you must split the IVA using the prorrata rules:

• General prorrata. This is your taxed turnover divided by your total turnover, rounded up.
• Special prorrata. This applies in some cases, or you can choose it.
• Costs used only for taxed work. You can deduct these in full.

Use the decision below to see which of the three situations is yours.

Borderline cases

If your activity sits between exempt and taxed, ask a tax adviser or the Tax Agency before you invoice. The Agency's binding rulings (consultas vinculantes) settle borderline cases. Charging IVA wrongly, or wrongly leaving it off, can lead to corrections later.

Choosing between options

Is your activity exempt from IVA, taxed, or a mix of both?

• All your services are exempt: You are a qualified, registered health professional giving health care, or you teach school or university subjects directly to pupils under your own name. You charge no IVA and cannot deduct the IVA you pay on expenses.

• All your services are taxed: Your work is outside the exemptions, such as cosmetic work, expert reports, leisure courses, languages in unrecognised academies or training for companies. You charge 21% IVA and can deduct input IVA.

• You do both exempt and taxed work: Some of your work is exempt and some is taxed. You charge IVA only on the taxed work. You deduct input IVA in full on costs used only for taxed work, and under the prorrata rules on shared costs.

If every service you sell is exempt, you charge no IVA and cannot deduct any input IVA. If any service is taxed, you charge IVA on it and can deduct the IVA on costs linked to it.

Frequently asked questions

Are language classes exempt from IVA?

Language classes are generally charged 21% IVA when given in academies the state does not recognise. Private classes on school or university subjects, given by you directly to pupils under your own name, can be exempt. Training sold to companies is generally taxed.

Is cosmetic work by a doctor exempt from IVA?

No, cosmetic or non-therapeutic work is not exempt, even if a qualified doctor does it. Only health care for a person, meaning diagnosis, treatment or prevention, is exempt.

What happens if I have both exempt and taxed activities?

You can deduct input IVA only in part, using the prorrata rules. The general prorrata is your taxed turnover divided by your total turnover, rounded up. Costs used only for your taxed activities can be deducted in full.

Can I claim back the IVA I pay if all my services are exempt?

No, you cannot deduct input IVA if all your activity is exempt. The IVA you pay becomes a cost of the activity. You may be able to deduct it as an expense for income tax.