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V2053-21 8 July 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Services from a Saudi Arabian firm subject to Spanish VAT via reverse charge mechanism

A Spanish law firm has requested clarification on whether judicial claim services provided by a collaborator in Saudi Arabia are subject to Spanish VAT and how potential double taxation with Saudi tax applies. The DGT ruled that the service is located in Spain because the recipient is an entrepreneur established there.

The question raised

Question raised 1. Place of performance of the services provided by the Saudi firm and whether they are subject to Value Added Tax.

The DGT's ruling

As the recipient is an entrepreneur or professional based in Spain, the services are deemed to be performed in Spanish territory pursuant to Article 69.1 of Law 37/1992. The inquirer must declare the transaction through the reverse charge mechanism. The effective use clause is not applicable to avoid double taxation; therefore, the service is taxed in Spain even if it is also taxed in Saudi Arabia.

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