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V1502-22 23 June 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · maquila

10% VAT rate applies to canned food processing if transformation occurs within a works contract

A tuna canning processing company has requested clarification on the applicable VAT rate for its services. The DGT has ruled that a 10% rate applies if the operation constitutes a works contract that transforms products into a distinct good, whereas a 21% rate applies if no transformation takes place.

The question raised

Value Added Tax rate applicable to the described services.

The DGT's ruling

Product transformation operations to obtain a different good are taxed at 10% if they constitute a work execution resulting in a good subject to that reduced rate. Conversely, operations that do not involve the transformation of one product into a different one are taxed at the general rate of 21%.

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