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V2503-17 5 October 2017 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · prestación de servicios

Legal services for private clients in the Canary Islands are subject to VAT based on the provider's location

A lawyer seeks clarification on whether services provided to a client in the Canary Islands are subject to VAT and if IRPF withholding applies. The DGT rules that the service is subject to VAT due to the provider's location and that there is no obligation to withhold IRPF if the client does not pay as part of an economic activity.

The question raised

Impact of Value Added Tax and subjection to withholding under Personal Income Tax.

The DGT's ruling

Legal services are subject to VAT according to the place of supply rules for the provider (Art. 69.One.2º Law 37/1992), as the client acts for private purposes and not as an entrepreneur or professional. Regarding Personal Income Tax (IRPF), there is no obligation to apply withholding if the income has not been paid in the course of an economic activity by the payer.

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