Back to index
V0824-19 16 April 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · maquila

Provision of toll manufacturing services to a foreign parent company is not subject to VAT if the recipient is not resident in Spain

A Spanish company manufactures pharmaceutical products for a Swiss parent company using an active ingredient imported by the company itself. The DGT determines that the activity constitutes a provision of services and is not subject to VAT due to the recipient's location, but confirms that the importation of the active ingredient is subject to VAT and is deductible.

The question raised

Classification of the operation carried out by the consultant on behalf of the parent company and deduction of the Value Added Tax amounts accrued in the importation of the active ingredient carried out by the consultant during this transitional period.

The DGT's ruling

If the value of the active ingredient provided by the client is greater than the materials provided by the manufacturer, the operation is classified as a provision of services. Such services are not subject to VAT if the recipient does not have its registered office or permanent establishment in Spanish territory. However, the importation of the active ingredient carried out in one's own name is subject to the tax and the company may deduct the amounts paid.

Book your free first meeting