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V1329-21 11 May 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario

VAT applicability to legal services depends on whether the estate is considered a business or a professional entity

A lawyer has requested clarification on whether legal defence services provided to an estate in the Canary Islands are subject to VAT. The Directorate General for Taxes (DGT) has ruled that VAT applicability will depend on whether the estate is classified as a business or a professional entity.

The question raised

Question posed: Liability of the described services to Value Added Tax.

The DGT's ruling

If the community of heirs is a businessperson or professional, the legal services are not located within the territory of application of the Tax, as the recipient is a businessperson established outside of it, without the rule of effective use being applicable. If the community of heirs is not a businessperson or professional, the services shall be subject to VAT provided that the lawyer has their registered office or establishment within the territory of application of the Tax.

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