- The administrative concession has evolved from public works in the Old Regime to the modern management of public services.
- There are various approaches to defining it, from a broad view of rights creation to a strict one of exploitation of public goods.
- They generally pay taxes through the ITP-AJD using form 600, with tax rates and fees depending on the purpose of the concession.
- The taxable base is calculated according to the type of fee, the duration of the contract and the possible reversion of assets to the Administration.
When we talk about administrative concessions , we're entering a realm where the State and private entities join forces to manage things that affect us all. Essentially, it's the legal mechanism by which the Public Administration entrusts a company or individual with the operation of a service, project, or public space, always under very clear and closely monitored rules.
This is nothing new, not at all. This concept has evolved alongside Administrative Law itself , adapting to the political and economic changes of each era. What began as a way to build bridges or ports in the Old Regime has ended up becoming a fundamental tool for public services to function properly today.
A journey through the history of concessions
To understand where we are, we have to look back. In France, as early as the 16th century, procedures were used for the Crown to contract infrastructure projects, such as canals or ports. At that time, they were known as the concession of public works . Interestingly, initially, whoever carried out the work retained the right to collect tolls to recoup their investment, and these rights were often perpetual , almost as if the project became their property.
As we move into the 19th century, the process becomes more professionalized, and the term "concession" becomes established in legal terminology. It was during the bourgeois liberal state that this legal concept experienced its true golden age. Initially, everything revolved around public domain and infrastructure projects, but by the end of the 19th century, the focus shifted to public services , as the state began to understand that its role should be to guarantee collective well-being more directly.
What exactly do we mean by administrative concession?
Defining this concept is not so simple because there are several approaches. If we take the broadest view (latu sensu), any act by the Administration that creates a new right for an individual or expands their legal sphere could be considered a concession. This position is common in countries like Germany and Italy and has greatly influenced Latin American law.
However, in a stricter sense, a concession is a contract that grants the right to exploit public goods or services. It is not simply a matter of granting permission, but rather a complex relationship where the concessionaire assumes obligations and risks in exchange for the potential economic benefit, always under the supervision of the public entity.
Types of concessions and real-world examples
In our daily lives, we encounter all sorts of concessions. Some of the most common are:
- Tourist services and hospitalityThis includes everything from managing a beach or a terrace to operating sports facilities.
- Infrastructure and transportManagement of bus lines, ports, airports or the famous public parking lots.
- Basic supplies: Drinking water supply, sewage management, energy or telecommunications.
- Natural resourcesRights to extract minerals from quarries or the exploitation of renewable energy.
The tax aspect: Taxes and models
Note that this isn't free. The granting of an administrative concession is usually subject to Transfer Tax and Stamp Duty (ITP-AJD) , specifically under the onerous transfers modality, with a general tax rate of 4%. Form 600 is used to manage this, and it's essential to understand the different types of taxes in Spain.
Depending on what is being granted, a different rate applies: the CEB rate for the operation of goods (such as a municipal warehouse), the CEO rate for the execution of works (such as renovating a market), the CES rate for services (such as drinking water) and the ANE rate for comparable businesses.
It is important to note that there are exceptions; for example, railway infrastructure concessions or facilities in airports and ports are not subject to this tax.
How to calculate the taxable base
To determine the amount due, several rules apply depending on the situation. If the fee is a fixed total amount for the entire period, that is the base amount. However, if the payment is periodic, the calculation changes: if it lasts less than a year, it is the total amount; if it lasts longer, the annual fee is compounded at 10%.
If the contract requires the return of the assets to the Administration at the end (what we call asset reversion ), the estimated net book value plus the costs of said reversion are added. In more complex cases where the value cannot be determined, 2% is applied for each year of duration to the fixed assets, analyzing the accounting depreciation methods , with a minimum of 10% and without exceeding the total value of the assets.
Given the complexity of these procedures and the potential for legal disputes, it is essential to have a lawyer specializing in administrative law . A professional can assist from drafting the application to representing you in court should any issues arise with the execution of the contract.
In short, we are dealing with a versatile legal tool that allows the private sector to manage public interests, moving between economic profitability and social responsibility , all regulated by a strict fiscal framework and a historical evolution that has prioritized the quality of citizen services.