We will inform you of the special rules for determining the location of VAT in the provision of services.
The location of a service for VAT purposes is a matter of great importance, since it will determine, among other aspects, whether the operation is subject to the tax, or who and how should declare the VAT that accrues.
In a previous article we explained the general rule for VAT location, but, as we mentioned earlier, there are a number of special rules that must be applied when performing certain services.
In this way, these services will be considered provided within the scope of the Tax when the requirements are met or the circumstances indicated in each case occur, regardless of where the recipient or the provider of the service is located.
We can relate the following cases:
- Services related to real estate: Spanish VAT will be levied on services related to real estate located in the territory of application of the tax (TAI), i.e., the Peninsula and the Balearic Islands.
We can cite, as examples, real estate leases, construction work, accommodation in hotels,…
- Transport: this rule is a little more complex because we must distinguish between passenger transport, which will generate Spanish VAT for the part of the journey that runs through the Peninsula or Balearic Islands, and freight transport.
In the latter case, if this service is provided to businesses or professionals, we must follow the general rule for VAT location, but if it is provided to individuals, we will have to distinguish, in turn, whether it is a community transport (Spanish VAT if the service starts in the TAI) or extra-community transport (Spanish VAT for the part of the journey that takes place in the TAI).
- Cultural, artistic, or scientific events. Fairs and exhibitions: if the recipient of the service is a private individual, Spanish VAT will be generated when these events take place within the Spanish VAT territory. However, this rule will only apply to access (ticket) and related services when the recipient of the service is a business or professional.
- Restaurant and catering: These services are located at the place where they are physically carried out, without prejudice to the fact that certain particularities are established when they are provided on board a ship, an airplane or a train.
- Mediation: There is a special rule when mediation is carried out for end consumers. In this case, transactions carried out in the name and on behalf of the individual will be considered to have taken place within the VAT territory when the transaction being mediated is deemed to have taken place there.
- Ancillary transport services / Works and construction on tangible movable property: This rule applies only when the recipient is a private individual. Services are considered to be located where they are physically provided.
- Rental services of means of transport: we must distinguish whether such rental is carried out for a period of time not exceeding 30 days (90 if it is a ship), which will carry Spanish VAT if they are made available to the client in the TAI, or whether it is long-term leases which will accrue Spanish VAT when the recipient is a private individual who has his residence in the TAI.
- Technology services: We refer you to the articles we have already published (See VAT on technology services, Changes in the taxation of electronic services or How can I declare the VAT I charge for electronic services provided?).
Finally, it should be noted that, in order to avoid situations where certain services are not subject to VAT, a catch-all clause whereby certain services are subject to VAT when their effective use or exploitation occurs within that territory. We will examine this catch-all clause in a future article.
VAT regulations are highly complex and encompass a wide variety of situations. Therefore, we encourage you to contact us and discuss your specific circumstances.
At Àmbit Assessor, we are experts in national and international taxation. We would be delighted to assist you.
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A graduate in Law and with a Master's degree in Tax and Financial Management from the University of Barcelona, he also holds a Postgraduate Diploma in New Technologies Law from ESADE. He specializes in tax and corporate law.
Before joining Àmbit Assessor as manager in 1999, he worked as head of the Tax and Accounting department at the Busquets Terradellas law firm.
For years, he combined his work with teaching, serving as a professor of Public Finance and Tax Law at the Open University of Catalonia.
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