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V0457-19 1 March 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · establecimiento permanente

Ownership of leased real estate does not, in itself, constitute a permanent establishment

A query was raised regarding whether the ownership of tourist apartments by non-residents constitutes a permanent establishment and who the taxable person for VAT is. The DGT ruled that mere ownership is insufficient; however, if human and technical resources are hired for management, it is considered a permanent establishment.

The question raised

Consideration of leased real estate as a permanent establishment of the owners within the territory of application of the Tax and as the taxable person for the lease thereof carried out in favor of the applicant.

The DGT's ruling

For a permanent establishment to exist, it is necessary to have an adequate structure of human and technical resources, whether owned or subcontracted, with a sufficient degree of permanence. The mere ownership of real estate operated under lease does not necessarily determine the existence of a permanent establishment if such resources are not available to provide the service independently. If the investor possesses management resources, they are considered established and are the taxable person for the tax, and must charge VAT to the applicant.

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