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V1633-23 9 June 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · suministro de calefacción

Heating supply must be taxed at 21% VAT, even if the natural gas used is at 5%

A company supplying heating and hot water to homeowners' associations has inquired whether it can apply the reduced 5% VAT rate to natural gas. The Directorate General for Taxes (DGT) has ruled that the heating service must be invoiced at the standard rate of 21%.

The question raised

Applicable tax rate in Value Added Tax for the energy supplies provided by the consulting company.

The DGT's ruling

The reduced rate of 5% applies to natural gas deliveries, but not to the heating service. If the company invoices for the heating service, it must apply 21%. However, if the hot water supply is ancillary to the heating, both shall follow the taxation of the principal operation. If the company were to make natural gas deliveries in its own name and not heating services, it could apply the 5% rate.

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