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V0860-15 18 March 2015 · SG de Fiscalidad Internacional Criterion in force
IVA · establecimiento permanente

No permanent establishment if sales promotion and marketing only

A Swiss entity asks whether its new operations in Spain, based on resident subsidiaries and marketing services, constitute a permanent establishment for VAT and IRNR. The DGT responds that no permanent establishment exists if agents lack the authority to negotiate or bind the entity.

The question raised

The taxpayer wishes to know, in relation to Value Added Tax and Non-Resident Income Tax, whether with the new operations they have a permanent establishment in the territory subject to the tax.

The DGT's ruling

For VAT purposes, a permanent establishment exists if there is a structure with sufficient human and technical resources and agents with the authority to negotiate and bind the entity. If the agents only perform sales promotion and marketing services without binding capacity, it is not considered a permanent establishment. For Non-Resident Income Tax, according to the Spain-Switzerland Convention, there is no permanent establishment if there is no fixed place of business nor dependent agents acting on behalf of the taxpayer.

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