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V0024-14 13 January 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · comunidad de usuarios

Water user communities for domestic supply are subject to VAT on their activities

A water community formed by three local councils has requested a ruling on its VAT treatment. The DGT has responded that, as it is not an irrigation community, its water distribution activities are subject to the tax.

The question raised

1. Treatment under Value Added Tax.

The DGT's ruling

The non-applicability of Article 7.8 of the VAT Law for public entities does not apply to the distribution of water, which is a business activity. Likewise, the non-applicability of Article 7.11 is exclusive to irrigation communities. Therefore, the taxpayer is subject to VAT on its supplies of goods and provision of services, both to partners and to third parties. It may deduct input VAT if it carries out taxable and non-exempt operations.

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