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V2687-20 2 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Assembly and logistics for an Italian company deemed service supply exempt from VAT

An Italian company asked whether assembly of engines and logistics carried out by a Spanish company constituted delivery of goods or service provision. The DGT concludes that, as the Italian company supplies most of the materials, it constitutes a service supply exempt from VAT in Spain.

The question raised

Whether the operations carried out by the Spanish entity in favor of the Italian entity should be classified as supplies of goods or as provisions of services.

The DGT's ruling

The classification of works execution depends on the importance of the materials provided by each party. If the client's materials represent the majority of the product's value, the operation is a provision of services. In this case, as the Italian entity provides 75.37% of the materials, the assembly and logistics are services. Since the recipient is a business without a permanent establishment in Spain, the operation is not subject to VAT.

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