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V1106-16 21 March 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Supplies of raw materials and finished garments from abroad are not taxable in Spain if transport begins outside the country

A Spanish company has requested a ruling regarding the location of raw material purchases in Italy, garment manufacturing, and the hiring of models in France. The DGT has determined that the supply of goods and manufacturing processes are not subject to Spanish VAT if the transport commences abroad; however, the manufacturing and model agency services are subject to Spanish VAT as the company is the recipient.

The question raised

Question raised: The entity raises a question regarding the classification and the place of supply for the acquisition of raw materials as well as the manufacturing of garments by the Italian manufacturer. Furthermore, the place of supply for the sales of clothing to the various buyers and for the services contracted with the French modeling agency is also questioned.

The DGT's ruling

The supplies of raw materials and manufactured garments are not subject to VAT in Spain if the transport or dispatch begins outside the national territory. The manufacturing of garments, as the client provides the entirety of the raw material, constitutes a provision of services. These services, together with those of the modeling agency, are located in Spain because the recipient is a taxable person established in this territory. The consulting company shall be the taxable person for said provisions of services.

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