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V1479-14 4 June 2014 · SG de Fiscalidad Internacional Criterion in force
IVA · establecimiento permanente

Presence of a permanent establishment depends on a dependent agent or fixed business location

A UK company asks whether it has a permanent establishment in Spain by using a warehouse of its subsidiary and having a partner with contracting powers. The DGT determines that the presence of an agent with powers to conclude binding contracts constitutes a permanent establishment.

The question raised

Whether or not a permanent establishment exists in Spain.

The DGT's ruling

A permanent establishment is considered to exist when a person acts on behalf of a foreign enterprise and habitually exercises powers to conclude contracts or negotiate all elements and details thereof, thereby binding the enterprise. Regarding a warehouse, it does not constitute a permanent establishment if its use is limited to storing, displaying, or delivering goods for preparatory or auxiliary purposes. In the event that a permanent establishment exists, it must comply with accounting, registration, and tax filing obligations in Spain.

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