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V5066-16 22 November 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · reglas de localización

Advertising and market research services may be taxable in Spain if their effective use is within national territory

A company has enquired whether its advertising and market research services are subject to taxation in Spain when the client is located abroad but the services are used for clients in Spain. The DGT explains that, even if the client is foreign, if the service is effectively used to carry out transactions subject to VAT in Spain, the effective use rule will apply.

The question raised

The place of performance of the services provided by the applicant, insofar as the advertising and mediation services provided by the search engine are performed both for clients established within the territory of application of the tax and outside of it.

The DGT's ruling

If the recipient is a business located outside of Spain, the general rule is that the service is not located in Spain. However, pursuant to Article 70.Two of Law 37/1992, if advertising services or market research services are effectively used or exploited in Spain to carry out transactions subject to the tax, they shall be deemed to have been provided within the national territory. In the event of partial use, the extent of use must be determined on a case-by-case basis, which may be based on the proportion of income from transactions subject to tax in Spain relative to the total income derived from those services.

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