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V1207-20 ·4 May 2020 ·consulta-vinculante Medium impact
Tax

Contractual penalty charges reduce the VAT taxable base in public works concessions

An association of companies enquired whether penalties imposed by the Administration on motorway concessionaires should reduce the VAT taxable base. The DGT ruled that, as these penalties serve a coercive rather than an indemnification purpose, they represent a reduction in the value of the service and must decrease the demand fee.

In 6 key points

How it affects those involved

This ruling clarifies that contractual penalties applied in public works concessions must be deducted from the VAT taxable base, as they constitute a reduction in the consideration for the service provided.

Lifecycle

2020-05-04PublishedPublished in the BOE
Official text Based on BOE data (boe.es). Information, not advice.

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This analysis is informational only and does not constitute legal advice or create a client-adviser relationship. BM Consulting.
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