Skip to content
Back to index
V1861-21 15 June 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · prestación de servicios

Consulting services to a US company not VAT liable unless effective use and exploitation rules apply

A professional asks whether VAT applies to billing consultancy services to a US company. The DGT states that, generally, such services are not subject to VAT if the recipient has no establishment or place of business in Spain, except where the rules on effective use and exploitation in Spanish territory apply.

The question raised

Regarding VAT: Whether Value Added Tax must be charged on the invoice.

The DGT's ruling

Consultancy services provided to a company without a registered office or establishment in Spain are not subject to VAT, unless the rule of effective use and exploitation in Spanish territory applies pursuant to Article 70.Two of Law 37/1992. For said rule to apply, the service must be used in Spain to carry out transactions subject to VAT. Regarding Personal Income Tax (IRPF), the obligation to withhold by the non-resident company requires that it operates in Spain with a permanent establishment or that the income constitutes a deductible expense for it under Non-Resident Income Tax (IRNR) regulations.

Book your free first meeting