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V2325-23 10 August 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · uso efectivo

Advisory services to non-EU individuals may be taxable in Spain if effectively used within national territory

A securities firm has queried whether its portfolio management and advisory services provided to non-resident individuals in third countries are subject to Spanish VAT under the effective use clause. The DGT has ruled that, while they might initially appear exempt, the new rule under Article 70.Two requires an analysis of whether such services are effectively used or exploited in Spain.

The question raised

Application of the effective use clause provided for in Article 70.Two of Law 37/1992, on Value Added Tax, to portfolio management and advisory services provided to individuals who are not entrepreneurs or professionals established in third countries, regardless of whether the invested assets are located within the territory to which the Tax applies.

The DGT's ruling

Advisory services provided to individuals outside the Community, Canary Islands, Ceuta, or Melilla, which would otherwise not be subject to tax, shall be considered performed in Spain if their effective use or exploitation takes place within the national territory. To apply this, it must first be determined whether the operations related to the service are performed in Spain and subsequently whether there is a direct or indirect relationship with the provision. This analysis must be conducted on a case-by-case basis and is a matter of fact that must be proven by the interested party.

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