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V1298-18 17 May 2018 · SG de Fiscalidad Internacional Criterion in force
IS · establecimiento permanente

Hiring a Spanish production executive does not constitute a permanent establishment

A UK production company asks whether hiring a Spanish company to produce a film in Spain creates a permanent establishment. The DGT responds that it does not, as the Spanish company acts as an independent service provider and does not establish a fixed business location for the UK company.

The question raised

Confirm that, as a consequence of contracting the services included in the Contract with the Spanish Executive Producer, the Consultant will not operate in Spain through a permanent establishment.

The DGT's ruling

No permanent establishment exists when an entity is limited to acquiring services provided by another, even if it benefits from them. The Spanish producer carries out its own economic activity, assumes risks, and acts under instructions, functioning similarly to a contract manufacturer or toll manufacturer. Furthermore, the requirement of having a fixed place of business at the disposal of the foreign company is not met.

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