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V2746-18 16 October 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · base imponible

Contributions for infrastructure exempt from VAT if not part of service payment

A municipal association asks whether funds transferred by a Water Agency for building wastewater treatment plants are subject to VAT. The DGT responds that these contributions are not part of the sanitation service payment and are therefore exempt from VAT.

The question raised

1.- Liability for Value Added Tax regarding the aforementioned contributions.

The DGT's ruling

Contributions intended to finance sanitation infrastructure do not constitute consideration for the operation and maintenance services of the WWTPs, and therefore are not subject to VAT. The sanitation services provided by the ELA to the Water Agency are subject to the tax as they are performed by one Public Administration to another that is not subordinate to it. The ELA are entitled to the deduction of the taxes incurred through the pro rata system. The construction of the WWTPs is subject to the investment of the taxable person as they are considered buildings.

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