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V0502-22 14 March 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · canon del agua

Water tariff exempt from VAT and not part of taxable base

A public entity asked whether the water tariff it collects is subject to VAT and whether it can deduct the VAT paid. The DGT states that the water tariff is not subject to VAT and should not be included in the taxable base of operations.

The question raised

Whether the water supply for which the aforementioned levy is paid is subject to Value Added Tax. Deductibility of the Value Added Tax quotas incurred by the consultant.

The DGT's ruling

The water levy cannot be equated to the provision of the water supply service, and therefore is not subject to VAT. As it is not a taxable operation, the levy must also not be included in the tax base of the operations taxed by this tax. Regarding deduction, entities performing both taxable and non-taxable operations must apply a reasonable and homogeneous criterion for the imputation of quotas, excluding those intended exclusively for non-taxable operations.

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