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V1786-15 9 June 2015 · SG de Fiscalidad Internacional Criterion in force
OTRO · establecimiento permanente

The existence of a permanent establishment in Spain may trigger the obligation to pay the Tax on Economic Activities

A UK company providing electronic services in Spain and maintaining an office with commercial representatives consults on its tax status. The DGT determines that the office constitutes a permanent establishment by conducting negotiations, which entails obligations regarding the Tax on Economic Activities and VAT.

The question raised

Obligation to pay the Tax on Economic Activities.

The DGT's ruling

The office in Spain is a permanent establishment because it carries out negotiating activities that are not merely preparatory or auxiliary. Due to the existence of this establishment, the company is liable for the Tax on Economic Activities. Regarding VAT, if the establishment intervenes in the transaction through the negotiation of contract elements, it is considered that the entity has a permanent establishment intervening in the provision of the service.

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