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V1359-16 1 April 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · distribución de agua

Water distribution by irrigation communities is subject to VAT if acquired, traded, or distributed for consideration

A query was raised regarding whether the operations of irrigation communities are subject to VAT and how they should deduct their input tax. The DGT clarifies that the distribution and commercialisation of water is a taxable activity, whereas water management and exploitation activities are not.

The question raised

Liability for VAT. Deductibility of input tax.

The DGT's ruling

Water distribution and marketing operations carried out by irrigation communities are subject to VAT when it is possible to acquire, treat, and distribute water for consideration. Conversely, water management and exploitation activities are not subject to the tax. Regarding deduction, the input tax incurred on goods and services intended exclusively for operations not subject to tax under Article 7.11 of Law 37/1992 is not deductible in any proportion.

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