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V0080-16 13 January 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ciclo integral del agua

Integrated water cycle operations are subject to VAT, even when carried out under a management mandate

A commercial entity managing the integrated water cycle under a mandate from a City Council has requested a ruling on VAT liability. The DGT has determined that these activities, including water supply and sewerage, are subject to the tax, and that fees must be included in the taxable base.

The question raised

1st Liability of the operations carried out by the consulting company for Value Added Tax and the tax base thereof

The DGT's ruling

Water distribution and integrated cycle activities (abstraction, purification, sewerage, and treatment) are subject to VAT as they constitute business activities. The non-applicability to Public Administrations does not apply in these cases, nor in management mandates when dealing with supplies of goods. The supply of water to municipal facilities without consideration is considered self-consumption subject to the regulation. Infrastructure improvement levies must be included in the tax base.

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