IGIC TREATMENT OF MONETARY CONTRIBUTIONS LIKE SUBSIDIES DIRECTLY LINKED TO THE PRICE. BINDING TAX RULING OF OCTOBER 27, 2019
Canary Islands General Tax Directorate has ruled through the binding consultation dated October, 27th 2019, as regard the tax base integration of the price-related subsidies given by Public Authorities.
This consultation is related to the new wording given to article 22.2 b) Law 10/1991, June 7th, of Canary Island Regime modification. In this sense, they are not considered as price-related subsidies those economic aids given by Public Authorities to develop public services when a distortion of competence has not taken place.
The consultant is a company which offers a transportation of individuals and is given subsidies for this operation from Public Authorities. Canary Islands General Tax Directorate, according to the above-mentioned article 22.2 b) considers that there is no distortion of competence, therefore, those economic aids should not be part of the taxable amount for IGIC purposes.
What makes this consultation interesting is that implies a criterion changing in this field, contradicting preceding consultations posted by the same Tax Directorate (in particular Binding consultation dated January, 1st 2008) in which, in the same context, but applying the preceding wording of article 22.2 b), economic aids given by Public Authorities were considered as price-related subsidies and consequently they should have been integrated in the IGIC´s taxable amount.
Finally, the article´s 22.2 b) new wording, equalize Canarian Tax Regime regarding price-related subsidies to the regulation already existing in the Peninsula Iberica and Balearic Islands where VAT is applicable.
Bearing in mind the above indicated, every scenario must be studied individually and the main conclusion is that, they are not considered as price-related subsidies those economic aids given by Public Authorities to develop public services when a distortion of competence has not taken place.