Skip to content
Back to index
V1432-20 14 May 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · exención financiera

Outsourced financial product trading services may be VAT exempt if the third party assumes responsibility for essential elements of the transaction

A securities firm has consulted whether outsourcing its financial product trading functions to a securities agent via an online platform is exempt from VAT. The DGT rules that for the exemption to apply, the services must constitute a distinct set that fulfills the essential functions of the financial transaction rather than being mere technical provisions, depending on whether the third party's responsibility extends to the specific elements of the activity.

The question raised

Exemption of outsourced services in Value Added Tax.

The DGT's ruling

For the outsourcing of financial services to be exempt, they must constitute a distinct set that fulfills the specific and essential functions of the operation, producing legal and economic changes for the parties. It is not sufficient for the service to be indispensable or technical, such as data management or computer systems. The exemption will depend on whether the provider's responsibility is limited to technical aspects or if it extends to the essential elements of the financial activity. In this case, if the third party assumes all risks and the responsibility for the essential elements, the service shall be subject to and exempt from tax.

Book your free first meeting