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V0066-18 17 January 2018 · SG de Fiscalidad Internacional Criterion in force
IRNR · establecimiento permanente

A Spanish server could constitute a permanent establishment if availability and activity criteria are met

An Irish algorithmic trading firm asks whether using a server in Spain to reduce latency constitutes a permanent establishment. The DGT states that although the server is a fixed location for activity, its classification depends on whether the company genuinely owns the equipment and whether the activity is merely auxiliary.

The question raised

Possibility that the server in Spain constitutes a permanent establishment.

The DGT's ruling

For a server to constitute a permanent establishment, it must be a physical location, be fixed, be at the disposal of the company, and perform activities that are not merely preparatory or auxiliary. Availability is analyzed based on control and the terms of the agreement with the server owner. If the server's functions constitute an essential and significant part of the company's activity, they shall not be considered auxiliary.

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