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V3128-17 4 December 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeto pasivo

No VAT on software and hosting services from parent to branch if the parent company bears the economic risk

A query was raised regarding whether the acquisition of software licences, hosting, and server services by Spanish branches from their French parent company is subject to VAT. The DGT ruled that the parent company's services are not subject to VAT as there are not two independent entrepreneurs, whereas services provided by other group companies are subject to it.

The question raised

Liability for Value Added Tax on the acquisition of software license, hosting, and server services by branches.

The DGT's ruling

If the branch does not assume the economic risk of its activity, but rather the parent company does, it is not a separate taxable person and there is no taxable provision of services between them. However, server services provided by another company within the group are subject to VAT, being located at the recipient's headquarters. Technological services provided by branches to other non-resident entities within the group shall be not subject to the tax.

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