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An irrigation community has requested clarification on whether passing on maintenance and investment costs to its members is subject to VAT. The Directorate General for Taxes (DGT) has ruled that if these costs arise from water management and use activities that are not subject to VAT, the re-invoicing of such costs will also be exempt from the tax.
This ruling provides legal certainty for irrigation communities, confirming that the VAT status of the underlying water management activities determines the VAT status of the subsequent cost recovery from members.
The tax team reviews your specific situation.
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