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A publicly owned commercial company has requested clarification on whether its wastewater treatment services are subject to VAT. The DGT ruled that liability depends on the provider: if provided directly by the City Council, it is treated as a tax (not subject to VAT); however, if provided by the commercial company, it constitutes an economic activity subject to VAT.
This ruling clarifies the tax distinction between municipal public services provided as taxes and those provided through commercial entities, impacting how municipal companies must invoice and account for VAT on essential services.
The tax team reviews your specific situation.
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