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V2135-19 13 August 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · refacturación de gastos

Recharging of expenses by a local council to a commercial entity is subject to VAT

A commercial entity operating a sports centre has enquired whether the recharging of utilities by the local council is subject to VAT. The Directorate General for Taxes (DGT) has ruled that such recharging constitutes a taxable supply of services, unless the costs are treated as disbursements.

The question raised

Whether such rebilling of expenses is subject to Value Added Tax.

The DGT's ruling

The rebilling of expenses constitutes a provision of services subject to VAT at the general rate of 21 percent. The taxable base must be determined according to the contractual agreement, which may include the VAT of the rebilled expenses themselves. However, amounts paid on behalf of and for the account of the client (disbursements) shall not be included in the taxable base, provided that the requirements of express mandate, justification of the exact amount, and that the intermediary does not deduct the tax are met.

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