VAT-Exempt Grants
Not all grants awarded to DTU are subject to the VAT Act. On this page, you can read about when a project falls outside the scope of the VAT Act and is therefore VAT-exempt.
Not all grants to DTU are subject to the VAT Act, because many of DTU’s grants are in the nature of donations and gifts that allow for unrestricted research. The VAT Act applies only when services of mutual value are exchanged—that is, when there is a consideration. If DTU receives funds and, in return, provides something of value to the grantor, it may be subject to VAT.
It is important that an assessment is always made at the very start of a project, as incorrect categorization as VAT-exempt will result in VAT having to be collected subsequently.
For clarity, VAT-exempt projects are also mentioned under the section on sales VAT, as they may be exempt as:
- Grants outside the scope of the VAT Act (gifts, donations, and education)
- Grants covered by specific exemptions in the VAT Act (e.g., within the same ministerial area)
On this page, you can read about when a grant is considered to fall outside the scope of the VAT Act and when it instead constitutes a VAT-liable consideration. Expand the menu below for an overview of the most important assessment criteria and examples.
Examples of VAT-exempt projects, both those that fall outside the scope of the VAT Act (education, gifts, and donations) and those that are exempt under specific exceptions in the Act (e.g., activities within the same ministerial area), are compiled on the page about sales tax. This has been done for the sake of clarity, as projects may be VAT-exempt for various reasons.
Grants that do not involve any real consideration fall outside the scope of the VAT Act and are therefore exempt from VAT. This applies, for example, to:
- Gifts or donations for which no consideration is required
- Grants with such a limited consideration that the value is not commensurate with the grant itself
Below are three examples of considerations that are so limited and of such a trivial nature that the project is generally considered to be exempt from VAT:
- The grantor's name/logo appears in published material
- The grantor is sent a financial report confirming that the grant has been used for its intended purpose
- The grantor is given the opportunity to review the final result before publication. It is important that the contract specifies that the opportunity to review the result before publication is intended to protect trade secrets. It is not sufficient to simply state that one would like to receive the final report before publication. The period between review and publication is extremely short. How short depends, among other things, on the industry, but a maximum of 2-4 weeks may be allowed.
Consideration typically takes the form of research results to which the grantor is granted exclusive or preferential access, as such exclusive access provides a competitive advantage.
Consideration may also take the form of advertising that has a market value equivalent to the grant received in return.
Contact
Christian Landsgaard Finance and Accounting chris@adm.dtu.dk