Skip to content
Back to index
V3193-20 26 October 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Community of Water Users acts as a business and can apply passive investment to solar plant construction

A Community of Water Users asks whether it is considered a business for VAT purposes when building a solar plant for self-consumption and sale of surplus. The DGT determines that it acts as a business and may apply the passive investment to the construction works.

The question raised

1.- Consideration of the applicant as a taxable person or professional for Value Added Tax purposes.

The DGT's ruling

The Irrigation Community acts as a taxable person by performing an activity subject to VAT (sale of surplus electricity) and an activity not subject to VAT (water management). As these are works executions for the construction of a building, the reverse charge mechanism applies. For the deduction of tax amounts, as it is a dual entity, it may use a reasonable and homogeneous criterion based on the proportion of kilowatts sold, provided that it proves its necessity.

Book your free first meeting