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V2377-24 20 November 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

Services provided to a Canary Islands Council may be exempt from VAT if deemed to be performed within the Canary Islands

A Canary Islands Council has requested clarification on whether hiring a musical band or entering into an advertising agreement with a private company is subject to VAT. The Directorate General for Taxes (DGT) indicates that if the parties are not located within the VAT application territory but in the Canary Islands, the transaction would not be subject to state VAT, although it may be subject to the Canary Islands General Indirect Tax (IGIC).

The question raised

Question posed: Whether the services provided to the inquiring City Council are subject to Value Added Tax.

The DGT's ruling

If the parties involved, including the City Council, are not established in the territory where VAT applies but in the Canary Islands, the services would be understood to be performed in the Canary Islands. In that case, they would not be subject to VAT if the City Council has the status of an entrepreneur or professional. The DGT refers the inquiry to the Government of the Canary Islands to determine taxation according to the General Indirect Canary Tax (IGIC).

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