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V1915-21 18 June 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · deducción de cuotas

VAT deductibility in infrastructure projects depends on compliance with Law 37/1992

A municipality asks whether VAT is deductible on water cycle improvement works and the nature of payments made to a managing entity to offset economic imbalances. The DGT states that compensation payments are exempt from VAT and that quota deductions in these works must follow the apportionment rules for dual entities.

The question raised

Deductibility of the Value Added Tax amounts borne by the taxpayer in the execution of the aforementioned works.

The DGT's ruling

The amounts intended to offset economic-financial imbalances do not constitute consideration nor price-linked subsidies, and therefore are not subject to VAT. Regarding the works, the deduction of the amounts borne by the Administration may be carried out if it jointly performs taxable and non-taxable operations, applying a reasonable and homogeneous imputation criterion. The amounts for goods or services intended exclusively for non-taxable operations shall not be deductible pursuant to article 7.8 of Law 37/1992.

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