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V0604-25 1 April 2025 · SG de Impuestos sobre el Consumo Criterion in force
IVA · suplidos

10% VAT rate applicable for water supply delivery and management if accessory to main service

A consultant asks whether the 10% VAT rate applies to water delivery and management costs refactured by a company. The DGT explains that it depends on whether these services are supplementary or accessory to the main water distribution service.

The question raised

Whether it is correct for the aforementioned company to charge 10 percent Value Added Tax on the indicated concepts.

The DGT's ruling

If customs and management expenses are paid on behalf of the client (paid in the name and on account of the client with the invoice issued in their name), they are not taxable. If they are re-invoiced, they are considered independent services subject to 21% unless they are ancillary to the water distribution service. In the latter case, being ancillary to the enjoyment of the main service, they shall receive the same tax treatment as the main service, applying the reduced rate of 10%.

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