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Dual entities: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Settled doctrine High confidence 17 rulings · 2015–2025

Current position

Distribution, water supply, and wastewater treatment services within the integrated water cycle are subject to IVA (Value Added Tax). Entities that simultaneously carry out taxable and non-taxable activities must apply the dual entity deduction regime under Article 93.Five of Law 37/1992. For goods and services with mixed use, a reasonable and homogeneous imputation criterion must be used, such as pro rata or the financial criterion.

The DGT's position remains constant regarding the application of the dual entity regime for mixed activities. The nature of taxable activities, such as the integrated water cycle, has been specified, and the obligation to apply reasonable imputation criteria for the deduction of tax amounts has been reinforced.

Turning points

  1. V0990-20

    Establishes that activities in competition with private agents and without public interest are subject to the tax, triggering the need for the dual entity regime.

  2. V0761-22

    Specifies that for goods with mixed use, a reasonable and homogeneous criterion must be adopted, pointing to the financial criterion as preferably applicable.

Analysis based on 17 of 17 rulings with a stated position. Updated 25 September 2026.

Rulings on this topic

17
V0761-22 7 Apr 2022

Rounding up allowed in dual entity deduction calculation

SG de Impuestos sobre el Consumo
entes dualesderecho a la deducciónoperaciones no sujetascriterio de imputaciónprorrata de deducción LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 5.1
Affects CompanyExpat · Non-residentIndividual

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