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V0651-18 12 March 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Legal services provided to foreign clients may be subject to VAT if used for operations in Spain

A consultancy has requested clarification on whether its legal services provided to companies in the Netherlands and Australia are subject to VAT, given that one service involves due diligence for a Spanish entity. The DGT explains that although the general rule places the provision of services outside of Spain, the effective use criterion may render the service taxable if it is used to carry out transactions subject to VAT within Spanish territory.

The question raised

Liability for Value Added Tax.

The DGT's ruling

Legal services provided to non-resident entrepreneurs are located outside of Spain according to the general rule. However, pursuant to Article 70.Two of Law 37/1992, they shall be considered provided in Spain if their effective use or exploitation takes place within this territory. To apply this criterion, the service must be related to transactions subject to VAT in Spain and must be used by the recipient for the performance of said transactions.

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