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V2393-23 6 September 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · subvenciones vinculadas al precio

Contributions to maintain the economic balance of a public transport service are not subject to VAT

An urban transport company enquired whether contributions received to compensate for decreased revenue or increased service frequency were subject to VAT. The DGT ruled that these contributions are neither price-linked subsidies nor consideration, as they do not result in a distortion of competition.

The question raised

Whether the aforementioned aid received by the taxpayer would be subject to Value Added Tax.

The DGT's ruling

Monetary contributions from Public Administrations to finance public services where there is no significant distortion of competition are not considered subsidies linked to price nor consideration for transactions subject to VAT. In the case of public transport services with fixed tariffs, the provision does not generate a distortion of competition. Therefore, such contributions do not form part of the taxable base of any transaction subject to the tax.

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