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V1311-18 18 May 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · subvenciones vinculadas al precio

Subsidies to cover municipal transport deficits are not included in the VAT taxable amount

A local council provides subsidies to an urban transport concessionaire to cover deficits or compensate for changes in fares. The DGT has ruled that these contributions are not price-linked subsidies and do not form part of the consideration subject to VAT.

The question raised

Liability for Value Added Tax on subsidies received.

The DGT's ruling

Contributions from the Administration to finance public services where no distortion of competition exists are not considered price-linked subsidies. In municipal transport, being an essential service with tariffs set by the City Council, there is no real or potential competition that justifies considering them part of the taxable base. Therefore, these subsidies do not constitute consideration for the transaction subject to tax.

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