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V0648-22 25 March 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tarifa de amortización

Amortisation fee for the use of hydraulic infrastructure is subject to VAT

A local authority association (Mancomunidad) requested clarification on whether the amortisation fee payable to a state-owned commercial entity for the financing of water supply works is subject to VAT. The Directorate-General for Taxes (DGT) ruled that this fee constitutes consideration for a service involving the use and operation of infrastructure, and is therefore subject to the tax.

The question raised

Whether the payment of said depreciation fee shall be subject to and, where applicable, exempt from Value Added Tax.

The DGT's ruling

Water distribution activities, including the integrated cycle, are considered business activities subject to VAT even if their consideration is of a tax nature. The depreciation fee, intended to recover the costs of advanced works, forms part of the consideration for the provision of services for the use and exploitation of the infrastructure. Therefore, this amount constitutes the taxable base of a transaction subject to, and not exempt from, VAT.

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