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V2401-19 12 September 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ciclo integral del agua

Recaudation service taxed at 21% VAT; user charges are non-taxable public patrimonial benefits

A municipality asks about the VAT rate applicable to waste collection services and the legal nature of charges for hydraulic infrastructure works. The DGT confirms that recaudation is subject to 21% VAT and that user charges, made through commercial companies, constitute non-taxable public patrimonial benefits.

The question raised

Type of Value Added Tax applicable to the collection service of the municipal fee for solid waste collection. Type of Tax applicable to services provided to the City Council relating to the improvement of integrated water cycle infrastructure. Classification, where applicable, as a fee of the costs that the City Council will pass on to subscribers for works on the integrated water cycle infrastructure. Deductibility of the Tax amounts incurred by the applicant arising from the indicated operations.

The DGT's ruling

The service of collecting the waste collection fee provided by a commercial company is taxed at 21%. Improvements to hydraulic infrastructure works passed on directly by the City Council to users, separately from the water supply, are taxed at the general rate of 21%. The City Council may deduct the tax amounts incurred for these acquisitions if it meets the requirements of the VAT Law.

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