Educational Services and the Super-Reduced IGI Rate: The Batllia Confirms the Restrictive Tax Authority Approach

Educational Services and the Super-Reduced IGI Rate: The Batllia Confirms the Restrictive Tax Authority Approach

Authors: Manuel Pérez Cambronero, Marc Urgell Díaz, Pau Pijuan Figuera

A recent judgment issued by the Batllia of Andorra provides important clarification regarding the application of the 0% super-reduced General Indirect Tax (IGI) rate to educational services.

The ruling confirms the restrictive position adopted in recent years by the Department of Taxes and Borders (DTF): only educational entities authorised by the Ministry of Education and delivering officially recognised training programmes may apply the 0% rate.

The judgment also provides relevant guidance on the place of supply of training services, particularly in the digital environment, requiring many training providers to reassess their tax position.

The 0% Super-Reduced Rate for Educational Services

Law 11/2012 on the General Indirect Tax (IGI) provides for the possibility of applying the 0% super-reduced rate to certain educational and training services.

However, the scope of this provision has been subject to different interpretations over recent years.

Initially, binding consultation CV0015-2015 considered that a commercial authorisation granted by the Ministry of Tourism and Commerce was sufficient to apply the super-reduced rate.

Subsequently, consultations CV0213-2021 and CV0254-2022 changed this approach and established that only entities expressly authorised by the Ministry of Education and delivering subjects included in official curricula may benefit from the 0% rate.

The Batllia Confirms the DTF’s Position

The judgment expressly confirms this administrative interpretation.

According to the Court, a commercial licence alone is insufficient to benefit from the super-reduced IGI rate.

Only educational institutions recognised by the Ministry of Education and offering officially accredited programmes may invoice their services at 0%.

In all other cases, educational services are subject to the standard IGI rate of 4.5%.

Place of Supply of Educational Services

Another key aspect addressed by the Court concerns the determination of where educational services are deemed to be supplied.

Recent DTF guidance clearly distinguishes between:

Educational Services

Where there is direct, continuous and essential teacher involvement.

Examples include:

• Live online classes.

• Personal tutoring.

• Active academic supervision.

• Continuous interaction between teacher and student.

In these situations, the service is classified as an educational service.

Electronic Services

Where teacher involvement is minimal or non-existent.

Examples include:

• Access to pre-recorded videos.

• Automated learning platforms.

• Digital content without tutoring or academic support.

In these cases, the service is considered an electronically supplied service.

Online Training: When Does IGI Apply?

Binding consultation CV0219-2021 establishes that educational services supplied from Andorra are deemed to be located in Andorran territory, regardless of where the student or client resides.

This means that an Andorran entity providing online training with active teacher participation must charge IGI on both B2B and B2C transactions, even when customers are located outside Andorra.

When Can an Online Course Fall Outside the Scope of IGI?

Only where the service qualifies as an electronically supplied service.

In such cases, the special place-of-supply rules contained in Articles 43 and 44 of Law 11/2012 may apply.

As a result, the transaction may be deemed to take place outside Andorra and therefore fall outside the scope of IGI.

However, this may create tax obligations in other jurisdictions, particularly within the European Union, including:

• VAT registrations.

• Periodic VAT filings.

• Charging local VAT to customers.

The Need to Review Tax Compliance

The consolidation of this judicial and administrative approach means that many educational providers should review their tax treatment.

Incorrect application of the 0% rate may result in tax reassessments by the DTF.

Furthermore, penalties may range from 50% to 150% of the tax underpaid.

Conclusion

The Batllia’s judgment clearly reinforces the restrictive interpretation adopted by the Department of Taxes and Borders regarding educational services.

Only entities authorised by the Ministry of Education and delivering officially recognised training programmes may apply the 0% super-reduced IGI rate.

In light of this development, educational providers should carefully review both their in-person and online training activities to ensure compliance with Andorran tax regulations.