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V1078-20 27 April 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · establecimiento permanente

No permanent establishment if no human or technical resources available

A non-resident with tourist rental properties asks whether a permanent establishment exists and whether the passive investor rule applies. The DGT states that no permanent establishment exists if there are no human or technical resources, own or subcontracted, for the activity.

The question raised

Whether it should be considered that a permanent establishment exists for the purposes of Value Added Tax in the territory to which the Tax applies, and whether the reverse charge rule provided for in Article 84.One.2.a) of Law 37/1992 must be applied to the services invoiced by the intermediary.

The DGT's ruling

For a permanent establishment to exist, it is necessary to have an adequate structure of human and technical resources with a sufficient degree of permanence. The mere exploitation of real estate under lease does not necessarily determine the existence of a permanent establishment if such resources are not available to provide the service independently. If there is no permanent establishment and the intermediary is also not established in Spain, the reverse charge mechanism does not apply, and the intermediary must charge VAT on the invoice.

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