Back to index
V3296-14 9 December 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Services provided to subsidiaries in third countries are not subject to VAT if not used in Spain

A company has requested clarification regarding the location of IT and consultancy services acquired from non-residents and subsequently re-invoiced to foreign subsidiaries. The DGT has determined that the acquisition of customised IT products constitutes a service subject to VAT via the reverse charge mechanism; however, the re-invoicing to foreign subsidiaries is not subject to tax as the criterion of effective use within Spanish territory is not met.

The question raised

Localization of said services.

The DGT's ruling

The acquisition of computer products manufactured to order or with substantial adaptations is considered a provision of services. If the recipient is a business established in Spain, the transaction is subject to VAT through the reverse charge mechanism. Conversely, services provided to entities outside the national territory are not subject to the tax, as the rule of effective use under Article 70.Two of Law 37/1992 does not apply since the subsidiaries' operations are not carried out in Spain.

Book your free first meeting