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V2507-20 22 July 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

Contributions to fund municipal transport services are not considered consideration or subsidies linked to VAT price

A municipal transport concessionaire inquired whether the economic compensations received from the City Council were subject to VAT. The DGT ruled that these contributions do not form part of the taxable base nor constitute consideration for taxable transactions.

The question raised

Liability for Value Added Tax on the contributions received by the applicant.

The DGT's ruling

Monetary contributions from Public Administrations to finance the management of public services where no significant distortion of competition exists are not considered subsidies linked to price nor consideration for transactions subject to VAT. In the case of municipal transport, the provision of the service does not determine a distortion of competition because no operator could provide it without the subsidy from the City Council. Therefore, such contributions are excluded from the tax base.

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