VAT treatment with respect to the “use and enjoyment rule” applied to translation services


Binding tax ruling V4124-15, issued by the Spanish General Tax Directorate on December 21, 2015.

This query analyses the case of a Spanish company that is engaged in providing translation services to entities not established in the European Union, in particular in Japan and Russia.

The Spanish General Tax Directorate begins by mentioning that for this service it would apply, in principle, the general rule for B2B cases considering that the service is rendered at headquarters of the recipient. However, the “use and enjoyment rule” included in article 70.Dos of the Spanish VAT Law, establishes for certain services, including those of translation, when in accordance with the rules of localization understand not carried out in the EU but effective use or exploitation are carried out in that territory, that such services shall be considered as rendered in the Spanish VAT territory.

At this point, it is crucial to know the criterion which leads to the determination that a service is used or enjoyed in the Spanish VAT Territory.

This query refers to the interpretation that has recently made the European Commission with regard to the “use and enjoyment rule” regarding market research services. In this sense, the Spanish General Tax Directorate, following the criteria of the Commission, has understood that if the recipient of the translation service carries out transactions that are subject to Spanish VAT to which the translation service is related, could establish a link that enables the applying of the “use and enjoyment rule”.

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CV 4124 15

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