Rectification by the Spanish General Tax Directorate about the location of legal advisory services
As DILIGENS advanced in our commentary, published on our website on 09.24.2014, on the binding tax ruling issued by the Spanish General Tax Directorate (hereinafter DGT) to the query V1549-14, the DGT has cancelled said tax ruling by posting a new one to the query V2851-14.
In this new binding tax ruling, the DGT expressly clarifies that legal advisory services rendered by a lawyer and addressed to American individuals, in relation to an inheritance caused by a Spanish citizen in which funds deposited in an equally Spanish bank distributed are not subject the Spanish VAT pursuant to Article 69.Dos.d) of Law 37/1992 of VAT.
With this binding tax ruling, the DGT rectifies the previous criteria of V1549-14 in which it argued that the service was located in the Spanish VAT territory, based on the application of the use & enjoyment rule referred in Article 70.Two of Law 37/1992 of VAT. However, as DILIGENS informed, said criteria was wrong due to the fact that the use & enjoyment rule, for the case of legal advisory services, only applies if the recipient of the service is an entrepreneur acting as such.
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