tai ivaThe rule of use and enjoyment in Spanish VAT territory has permitted attracting to this territory and taxing Spanish VAT on services that, with the application of the general rules on the location of transnational services, would otherwise be located outside the European Union.

The evaluation as to whether services would effectively be used in the Spanish VAT territory has been subject to controversy, as it required determining the relationship between the services rendered and the transaction to which they served and their use in the Spanish VAT territory.

• EU Council Directive 2006 / 112 /CE of 28 November 2006 permitted member states, in order to avoid double taxation or non-taxation scenarios, or distortions of competition, to consider that the rendering of certain services, that according to the rules applying to the location of services would be considered to take place outside the European Union, would be subject to local VAT when the use and enjoyment of such services would take place in the territory of the member state where the services provider is located. This provision, as an anti-abuse measure that applied to B2B transactions, evidenced that it limited the international competitiveness of Spanish enterprises.

• Based on such grounds, Spanish General Budget Law for Fiscal year 2023, removed its application since January 01, 2023, on B2B services in sectors and business activities that permitted the deduction of input VAT while keeping it in sectors that would not permit it, such as the financial or insurance sector.

• With effect from May 26, 2023, a new measure was adopted according to which this rule was excluded from B2B transactions undertaken in financial and insurance activities, with the purpose of guaranteeing the neutrality of VAT and the capacity of strategic economic sectors. With this change, these transactions are located out of the Spanish VAT territory and, therefore, permit the service supplier to deduct input VAT, as opposed to the previously existing scenario in which, although the services were located in the Spanish VAT territory, they were considered exempt and did not permit the input VAT deduction.

• This way, the application of this rule has been reduced to:

  • i. Services or Article 69 Two of Spanish VAT Law – intellectual or industrial property assignment, consulting, publicity, data treatment …- rendered to private individuals. And,
  • ii. Hiring of means of transportation.

• Both regulatory changes simplify the practical application of VAT in transnational services rendered by Spanish companies since the entering into force of each one of the changes, as well as reduce the excessive disputes that have been generated on this subject.


Publicado el 09-2023 por PBS