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V1041-20 24 April 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

Services provided to an EU company are exempt from Spanish VAT if the provider qualifies as a business entity

An employee seeks clarification on whether they must register with the Tax Census and charge VAT for one-off consultancy work for an EU-based company. The Directorate-General for Taxes (DGT) indicates that if the activity is intended to be continuous and involves organised resources, the individual is considered a business entity. In such cases, the service provided to the foreign client is not subject to VAT in Spain; however, any collaborators must still charge VAT to the consultant.

The question raised

Obligation to register in the Census of entrepreneurs, professionals and retainers and in the Registry of intra-Community operators. Obligation to charge Value Added Tax on the invoice issued for that specific work, and the amount thereof. Likewise, the obligation of the three persons assisting the consultant to register in the Census of entrepreneurs and to issue an invoice with the imposition of the Tax, for the compensation that the consultant satisfies them for their assistance.

The DGT's ruling

If the provision of services involves the organization of means of production with the intention of intervening in the market, the status of entrepreneur or professional is acquired even if on an occasional basis. In that case, the service to the customer in the EU will not be subject to VAT in Spain due to the rules of localization. However, the collaborators assisting the consultant must issue an invoice with 21% VAT when performing the service in Spanish territory.

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