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V2541-20 27 July 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · prestación de servicios

Electronic services provided to an Australian company are not subject to VAT if there is no effective use in Spain

A professional enquired whether their search engine evaluation services provided to an Australian company were subject to VAT and Personal Income Tax (IRPF). The DGT indicates that the transaction is not subject to VAT if no effective use or exploitation occurs in Spain, and that the income is taxable under IRPF as income from economic activities.

The question raised

Regarding VAT: Whether such activity must be taxed under Value Added Tax.

The DGT's ruling

The provision of services via electronic means to a taxable person not established in Spain is not subject to VAT according to the rules of location, unless the criterion of effective use or exploitation in Spanish territory applies. For this effective use criterion to be applicable, the service must be used in the performance of transactions subject to VAT in Spain. Regarding Personal Income Tax (IRPF), the income constitutes returns from economic activities and, upon commencement of activity, the obligation to submit installment payments depends on whether 70% of the income has been subject to withholding.

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