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V4171-16 30 September 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ciclo integral del agua

Drinking water supply and sanitation services subject to 10% VAT

A consortium of municipalities has requested clarification on the VAT rate applicable to the provision of water supply and sanitation services. The Directorate-General for Taxes (DGT) has ruled that these activities are subject to VAT and must apply the reduced rate of 10%.

The question raised

Applicable tax rate.

The DGT's ruling

Public Administrations are considered entrepreneurs when they organize resources to carry out business activities for consideration. Water distribution is an activity subject to VAT, including the integrated cycle (abstraction, supply, purification, distribution, sewerage, and treatment). A 10% rate applies to the supply of water suitable for human, animal, or irrigation consumption, and to sewerage cleaning and wastewater treatment services. Otherwise, the general rate of 21% applies.

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