VAT exemption in financial intermediation through dealerships

The Directorate General of Taxes (DGT) has issued a relevant ruling regarding the application of the Value Added Tax (IVA) exemption in financial intermediation activities. The analysis focuses on determining whether mediation services provided between a credit institution and dealerships can benefit from the tax exemptions provided for in current regulations.

What the DGT has resolved

The query concerned the applicability of the exemption established in Article 20.One, paragraph 18, letter m) of Law 37/1992. The core of the issue is whether the financial intermediation activity, carried out between the applicant and the dealerships, qualifies as an exempt service.

The criteria are based on the nature of the service provided. For the exemption to be applicable, the activity must fall within the financial intermediation scenarios contemplated by the law, analyzing the provider's role in bringing the parties together and the added value they bring to the process of marketing financial products.

What it means for you

This criterion has a direct impact on credit institutions that use dealership networks to market their products. The classification of these mediation services determines whether the invoice issued by the intermediary must include the corresponding VAT rate or if, conversely, the legal exemption can be applied.

For companies in the financial sector, the correct interpretation of this scenario is decisive for the cost structure and the management of their intermediation services. An incorrect classification could lead to an incorrect tax settlement before the Tax Administration.

What should be done

It is necessary to analyze the technical nature of the mediation contracts and the way the functions of bringing the entity and the dealership together are executed. The determination of the exemption depends on the activity strictly complying with the requirements of Law 37/1992 and Directive 2006/112/EC.

Each financial intermediation business model presents particularities that require a technical assessment of the services provided. It is recommended to evaluate the actual mediation operations to ensure that the applied tax treatment is correct according to the DGT doctrine.