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V5198-16 30 November 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · saneamiento de aguas residuales

Wastewater sanitation services provided by a public entity to its City Council are not subject to VAT

A commercial company, wholly owned by a City Council, inquired whether maintenance and operation services for a wastewater treatment plant are subject to VAT. The Directorate General for Taxes (DGT) ruled that, as the entity acts as a dedicated internal resource and technical service for the City Council, the provision is not subject to the tax.

The question raised

Liability for Tax regarding the aforementioned services provided to the City Council by the consulting entity.

The DGT's ruling

Wastewater sanitation services provided by a public sector entity to the Public Administration that holds all of its capital are not subject to VAT. This criterion applies when the entity acts as its own means and a technical service of the Administration. However, the provision will be subject to the tax if it is carried out in favor of another Public Administration that does not hold ownership of the entity or does not depend on the owning Administration.

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