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V4495-16 18 October 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ciclo integral del agua

Reduced VAT rate of 10% applies to drinking water supply and sanitation services provided by a Consortium

A City Council has requested clarification on the VAT rate applicable to invoices issued by a Consortium for drinking water supply services. The Directorate-General for Taxes (DGT) has ruled that these operations are subject to VAT and must be charged at the reduced rate of 10%.

The question raised

Applicable tax rate in the invoice issued by the Consortium to the city councils to which it invoices for the concept of consortium-based provision of drinking water supply services.

The DGT's ruling

Public Administrations and consortia are considered entrepreneurs when they carry out business activities on a continuous and onerous basis. The distribution of water and the integrated water cycle (abstraction, supply, purification, distribution, sewerage, and treatment) are subject to VAT. A rate of 10% applies to water suitable for human or animal consumption or irrigation, and to sewerage cleaning services and wastewater treatment services.

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