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V3161-20 22 October 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · subvención vinculada al precio

Contributions to fund municipal transport services are not subject to VAT and do not require an invoice

A local council has requested clarification on whether contributions made to offset the deficit of a franchised urban transport service are subject to VAT and whether an invoice must be issued. The DGT ruled that, as there is no distortion of competition, these contributions are neither price-linked subsidies nor consideration subject to tax.

The question raised

Whether the payment of said subsidy is subject to Value Added Tax and whether said entity is obliged to issue an invoice for the receipt of such amounts.

The DGT's ruling

Contributions from Public Administrations to finance public services where there is no significant distortion of competition are not considered subsidies linked to price nor consideration for transactions subject to VAT. As no transaction exists for tax purposes, there is no obligation to issue an invoice, although the collection must be documented with other supporting documents.

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