An article of our associate Dott. Gianni Mario Colombo, administrative and tax expert, about the fiscal impact of educational café.
Gianni Mario Colombo, RatioQuotidiano; December 9, 2019.
Educational institutions all over the country have been promoting professional-setting education experiences, aimed at enhancing learning and closing the gap between education and work.
We are referring to the so-called educational businesses, inspired by Belgian EFTs (Enterprise de la Formation par le travail).
The Revenue Agency’s reply to the school’s request about the educational café (reply n. 446/2019) sheds some light on the issue of these business initiatives and their fiscal impact, provided that in this case, schools have the right to carry out activities and provide services on behalf of third parties to perform their educational duties; they also have the right to alienate the goods they produce to perform educational or scheduled activities (art. 38 D.I. n. 44/2011).
The instance we are currently examining refers to a public educational institute. Among the activities carried out for the institution’s didactic and educational purposes, the teaching staff is evaluating the prospect of opening an educational café on campus, during specific times, providing snacks and drinks to the staff and students of the institute.
By the Revenue Agency’s reply, we can infer that the fiscal impact of this new education method involves two main points:
- The legal status of the subjects involved;
- The fiscal status (VAT and direct taxation) of the activity.
As for the first point, to the purposes of direct taxation, the school (being a public entity carrying out a public service, that is, higher education) is performing a non-commercial activity (decommercialized activity, under art. 74, c. 2, lett. a) of Tuir), as this extracurricular activity is an institutional educational activity.
A note: it would be interesting to verify the fiscal status if the same activity was carried out by a private entity (whether commercial or non-commercial, under art. 73, c. 1, lett. b) or c) of Tuir).
Any revenues deriving from selling food and beverages should lead to it being considered a commercial activity, to the purposes of taxation.
Back to the main issue. As for the VAT, the Revenue Agency states that, to decide if a certain activity is performed as a commercial activity by a non-commercial entity, art. 4, c. 4 D.P.R 633/1972 establishes that only the transfer of goods or the performance of services carried out as a commercial activity must be considered.
Having established that the educational café activity is a part of the institute’s training program and is the natural conclusion to the students’ professionalization course, in this case, the institute is not specifically organized to implement the activity.
Considering the aforementioned circumstances, the Agency states that the educational café activity does not qualify as a business activity, and, in absence of the conditions mentioned in the aforementioned art. 4, c. 4, is not relevant to VAT purposes.