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V0955-20 20 April 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario

VAT liability for cleaning and waste services provided by a commercial entity

A commercial entity owned by a municipality asks whether its cleaning and waste management services are subject to VAT and whether transfers from the municipality constitute taxable supply. The DGT confirms that the services are subject to VAT and examines the nature of the transfers and the right to deduction.

The question raised

Whether the services provided to users and the transfers received from the City Council are subject to Value Added Tax. Deductibility of the Value Added Tax amounts incurred by the consulting entity.

The DGT's ruling

The entity holds the status of a business person and its services to end users are subject to VAT as they do not constitute tax-exempt considerations. Road cleaning and waste collection services are taxed at 10%, whereas school cleaning applies a 21% rate. Services provided to the City Council may be exempt from tax if they are considered assignments of own means personified or services between fully dependent entities. Transfers from the City Council form part of the taxable base if they are subsidies linked to the price, but not if they finance the fixed structure or management without distorting competition.

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