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V2433-19 13 September 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · establecimiento permanente

Services provided to a foreign branch may be subject to VAT if the actual recipient is the Spanish parent company

A professional provides IT services to a Belgian branch of a Spanish company for use in a subsequent service provided to a client in Spain. The DGT rules that if the service is intended for the Spanish parent company rather than the branch's own needs, the transaction is subject to VAT in Spain, and the consultant is the taxable person.

The question raised

Liability for Value Added Tax on services provided by the taxpayer.

The DGT's ruling

If the service provided to a foreign branch is used for the subsequent provision of a service of the same nature by the parent company, the branch is not considered to be using it for its own needs. In this case, the recipient is the parent company based in Spain, so the provision is understood to be carried out in Spanish territory pursuant to Article 69.One.1º of Law 37/1992. The taxpayer shall have the status of taxable person and must charge VAT to the Spanish parent company.

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