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V2553-18 19 September 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

Subsidies to cover operating deficits in public transport services are not included in the VAT taxable base

A passenger transport concessionaire has requested clarification on whether subsidies received to cover operating deficits must be included in the VAT taxable base. The Directorate-General for Taxes (DGT) has ruled that, as there is no distortion of competition, these contributions are not considered price-linked subsidies.

The question raised

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

The DGT's ruling

Monetary contributions from Public Administrations to finance the management of public services are not considered price-linked subsidies nor do they constitute consideration for the service if no significant distortion of competition exists. In the case of essential transport services where no operator could provide them without the subsidy, such distortion is not observed. Therefore, the subsidy to cover the operating deficit does not form part of the VAT taxable base.

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