Supply of totally subsidized electricity in consideration for a cession of land. VAT taxable base
The case of the binding consultation does relate to the transfer of communal land to an electric company by a City Council and neighbours of the municipality for which the electricity company has committed to provide electricity at a fully subsidized price, up to a determined quantity, and at a price agreed for the excess consumption. This company also provides additional services such as the rental of equipment or the term of power totally or partially subsidized.
As it is a fully subsidized price, the General Tax Directorate (DGT) is consulted if the supply of electricity is subject to VAT and, where applicable, the tax base of the transactions.
Firstly, the DGT confirms that electricity supplies made (treated as supplies of goods for VAT purposes) have onerous nature, since although they have a fully subsidized price, the consideration received in this case are the land that is assigned for use. Therefore, taking into account that the consideration is not monetary, or at least not totally, it will have to follow the special rules to determine the taxable base of the tax, which are established in article 79 of the Spanish VAT Act.
In particular, article 79, section one, establishes that in transactions whose consideration does not consist of money the taxable base shall be considered as the amount, expressed in money, agreed upon by the parties, applying the rules set forth in sections three and four of article 79. Thus, in this case, the rules set forth in section three concerning self-consumption of goods would apply for the part of the fully subsidized price, while for the non-subsidized part the taxable amount will consist of the agreed price.
In line with the above, for the self-consumption in which the goods are supplied in the same status in which they are acquired, the taxable base will be the same that would have been set for the acquisition of them. Therefore, in the present case in which the electric company acquires energy previously from another entity, the taxable base of its fully subsidized supplies will be the price at which the company acquired the energy. The same rule applies to all other services, totally or partially subsidized.
A copy, in Spanish, of the binding tax ruling number V4624-16 is attached.