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V0255-21 16 February 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · comunidades de aguas

Water sales by Canary Water Communities constitute an economic activity

A shareholder of a Canary Water Community inquires about taxation on water flow sales and the rental of exploitation rights. The DGT determines that sales constitute economic activity profits and temporary cession profits from movable capital.

The question raised

Taxation of the indicated operations. Withholdings.

The DGT's ruling

The sale of water carried out by a natural person holding shares in a Water Community of the Canary Islands is considered income from economic activity. The temporary assignment of water use rights is classified as income from movable capital. In the sale of water, there is no obligation to withhold tax, whereas in the temporary assignment, there is an obligation to withhold if the payer is a subject required to do so. In both cases, the Community fees paid proportionally are deductible expenses subject to specific limits.

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