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V0832-18 26 March 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Rental of musical instruments to non-residents may be subject to VAT if effective use occurs in Spain for taxable transactions

A company has requested clarification on whether the rental of musical instruments to clients in the Canary Islands and the United States is subject to VAT. The DGT explains that although the general rule places the transaction outside of Spain, it could be taxable if the service is effectively used to carry out transactions subject to VAT within Spanish territory.

The question raised

Liability for Value Added Tax regarding said service.

The DGT's ruling

The general location of services to non-resident entrepreneurs is situated outside of Spain. Notwithstanding, pursuant to Article 70.Two of Law 37/1992, the rental of movable property shall be subject to VAT if its effective use or exploitation takes place within Spanish territory for transactions subject to the tax. To apply this clause, there must exist a link between the service and the transactions carried out by the client in Spain.

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