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V1909-24 22 August 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · concesión de servicios

Municipal enterprise status determines VAT deductibility and service concession treatment

A municipality asks whether it can deduct VAT on constructing a stormwater basin for a sewerage service managed under a concession. The DGT explains that deductibility depends on whether the municipality acts as an entrepreneur or professional and on the legal nature of the service concession contract.

The question raised

Question raised: Deductibility of the Value Added Tax amounts incurred by the taxpayer in the execution of the aforementioned works. Taxable person for the Tax in said execution of works.

The DGT's ruling

The allocation of assets by the Administration to the concessionaire for the development of services constitutes an operation not subject to VAT pursuant to Article 7.9 of Law 37/1992. If the infrastructure is intended exclusively for a concession not subject to the tax, the amounts incurred in its construction shall not be deductible to any extent. In the case of mixed operations, a reasonable and homogeneous imputation criterion must be applied.

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