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V1758-20 3 June 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tasa

VAT applicability for waste collection depends on the service management model

A City Council has requested clarification on whether waste collection and transfers to its commercial subsidiary are subject to VAT, and whether the charge constitutes a fee. The Directorate-General for Taxes (DGT) clarifies that the nature of the charge (a fee or a non-tax public patrimonial provision) determines both the VAT liability and the collection procedure.

The question raised

Whether both the provision of the waste collection service to end users and the transfers made by the City Council for the benefit of said company are subject to Value Added Tax. Whether the consideration for said service has the status of a fee. Procedure in the event of non-payment during the voluntary period of said consideration.

The DGT's ruling

If the City Council provides the service directly and the company is merely an instrument, the consideration is a fee and is not subject to VAT. If the commercial company provides the service directly, the consideration is a non-taxable patrimonial provision and is subject to VAT. In the case of the non-taxable patrimonial provision, non-payment must be managed through the enforcement procedure by the local tax authority, not by the company.

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