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V1618-22 4 July 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · establecimiento permanente

No permanent establishment if no adequate human, technical or physical facilities in Spain

A company inquired whether setting up a new non-resident entity to market wines would require a permanent establishment in Spain without warehouses. The DGT concludes that, lacking installations or own resources, there is no permanent establishment, and maquila services are not subject to Spanish VAT.

The question raised

Existence of a permanent establishment within the territorial scope of Value Added Tax by the parent company or the new non-resident company, given that due to the characteristics of the production process, they will not have storage or logistics facilities at the same location. VAT treatment of the wine production services provided to the applicant or to the new company.

The DGT's ruling

For a permanent establishment to exist, an adequate structure of human and technical resources with a sufficient degree of permanence is required. The mere fact of using third-party warehouses or contracting toll manufacturing and processing services does not determine the existence of a permanent establishment. If the company does not have a permanent establishment in Spain, the wine production services provided to said company shall not be understood to be performed within the territorial scope of the tax.

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