Binding tax ruling number 1549-14 about the “use and enjoyment rule” on location of services


The ruling covers legal advisory services rendered by a lawyer to beneficiaries, American private individuals, in relation to an inheritance caused by a Spaniard in which funds deposited in a Spanish bank were distributed.

The Spanish General Tax Directorate solves this query attracting the taxation of the service to Spain by the application of the use and enjoyment rule referred to in Article 70.Two of Law 37/1992 of Spanish VAT.

According to the criteria of Diligens Tax Consulting, the Genral Tax Directorate makes a mistake in solving this query, due to the fact that the use and enjoyment rule above mentioned, for the case of legal services only applies in the event that the recipient of the service is an entrepreneur or professional acting as such.

Therefore, in our opinion, this service would be located out of the Spanish VAT territory pursuant to Article 69.Dos.d) of Law 37/1992 of Spanish VAT, not subject to Spanish VAT.

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