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V2453-14 18 September 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario

Acquisition of goods and services by a local council to ensure public services is subject to VAT

A local council sought clarification on whether acquisitions made to guarantee cleaning services, following a contractor's breach of contract, were subject to VAT. The DGT ruled that these operations are indeed subject to the tax and that the council must charge the VAT to the successful bidder via invoice.

The question raised

Treatment of said operations in Value Added Tax.

The DGT's ruling

The City Council acts as an entrepreneur by organizing personal and material resources to carry out the activity under its responsibility. Although public entities may not be subject to tax in their public functions, in this case, non-subjectivity would cause a distortion of competition. Therefore, the operations are subject to VAT and the City Council must charge the tax to the successful bidder by means of an invoice.

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