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V1054-14 14 April 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeto pasivo sustituto

Water levy must be included in the VAT taxable base for supply companies

A homeowners' association in Catalonia inquired whether the water levy charged to its customers should be included in the VAT taxable base. The Directorate General for Taxes (DGT) ruled that, as supply companies act as substitute taxpayers, the levy does not constitute a disbursement on behalf of a third party and must therefore be included in the taxable base.

The question raised

Impact, within the scope of Value Added Tax and regarding the water levy, of the amendments introduced to the Recast Text of the water legislation of Catalonia, approved by Legislative Decree 3/2003, of November 4, by Law 5/2012, of March 20, on fiscal, financial and administrative measures and the creation of the tax on stays in tourist establishments.

The DGT's ruling

Water supply companies, acting as substitute taxable persons for the taxpayer pursuant to regional regulations, do not act in the name and on behalf of the customer nor by express mandate of the same. Therefore, the requirements to consider the water levy as a payment on behalf of a third party are not met. Consequently, the water levy must form part of the VAT taxable base of the supply operations.

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