Back to index
V3027-20 8 October 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · refacturación de gastos

Recharging water consumption costs to a concessionaire is subject to VAT and allows deduction based on use

A university sought clarification on whether passing on water costs to a company managing sports services is subject to VAT and if the tax paid can be deducted. The DGT ruled that recharging these costs constitutes a service subject to VAT and explains the deduction regime for dual entities.

The question raised

Subjectivity to Value Added Tax on rebilled expenses. Deduction of input tax.

The DGT's ruling

The rebilling of expenses constitutes a provision of services subject to VAT, and the general rate of 21% must be applied to the taxable base. If the expenses are paid on behalf of and for the account of the client (disbursements), they do not form part of the taxable base provided that the requirements of express mandate and exact matching of amounts are met. Regarding deduction, the university, as a dual entity, may deduct the input tax incurred that exclusively affects taxable transactions or the proportional part of those intended simultaneously for taxable and non-taxable transactions through a reasonable and homogeneous criterion.

Book your free first meeting