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V0305-26 12 February 2026 · SG de Impuestos sobre el Consumo Criterion in force
IVA · comunidades de regantes

Water distribution infrastructure works subject to 10% VAT

A water users' association asks whether hydraulic infrastructure works for water distribution are exempt from VAT. The DGT confirms these works, as part of water distribution activities, are subject to the reduced 10% VAT rate.

The question raised

Liability of the operations for Value Added Tax and the applicable tax rate, as well as whether these works will be considered investment goods and whether the tax incurred in their execution may be deducted by the consultant.

The DGT's ruling

The execution of hydraulic infrastructure works intended for the distribution and storage of water for irrigation, carried out for the benefit of the community members, is considered a water distribution activity subject to VAT. Therefore, the cost of said works and the supply fee form part of the taxable base for the irrigation water supply, taxed at the reduced rate of 10%. As these are taxable operations, the input tax incurred in their execution generates a right to deduction, which must be regularized if the buildings are considered investment goods.

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