The Supreme Court has established jurisprudence in relation to the application of the use and enjoyment rule in VAT for advertising services provided by a Spanish company to an entity not established in the EU (Gibraltar) and devoted to the provision of online gambling through digital platforms, when these services are used by the recipient entity in the Spanish VAT territory.

The case comes from the VAT settlement proposed by the Tax Administration as a result of a tax inspection carried out for the periods between the third quarter of 2008 and the fourth quarter of 2011. In disagreement with this liquidation, the entity appealed before the Economic-Administrative Court (TEAR) of Madrid, which determined that there was no doubt that we were in a case of advertising services that, as a general rule, would not be deemed placed in the VAT territory since the recipient of the services was a company established in Gibraltar. However, the TEAR continues, shall be applicable the special rule contained in article 70.Two of the Spanish VAT Act, by which these services would be deemed as placed in the Spanish VAT territory and, therefore, subject to VAT, when the effective use of the referred services take place in such territory. This last aspect focuses all the controversy, since it is about elucidating whether they are used in the VAT territory or not, reaching to the conclusion, based on the facts and evidence provided in the procedure, that had the effective use by the recipient in said territory, thus are subject to VAT.

Subsequently, the Court of Justice of Madrid was appealed, claiming that the services provided had a global aim, since the purpose was an advertising strategy for players from anywhere in the world. In this regard, the appellant maintains that the recipient entity carries out its activity globally, in many countries, so that these advertising services can have their effective use anywhere, not only in the VAT territory. In addition, in any case, the appellant proposes a partial application of this rule, depending on the income of the gambling entity obtained from players in Spain.

However, the Court based its resolution on the jurisprudence of the Court of Justice of the European Union (ECJ), which had already ruled in a similar case (Athesia Druck Srl) whereby it was established that the services should be understood as performed in the country from which broadcast the advertising messages. Thus, the Court considers that, if the advertising services are addressed to the Spanish market, with the purpose of attracting customers who participate in online games organized by the Gibraltar entities, it is necessary to consider that these services are used in the Spanish VAT territory. Consequently, from the evidence and documents provided in the procedure, it has been more than justified that the advertising services were aimed to promote the entity’s activity in Spain, as is proved by the invoice issued by the appellant for services “addressed” to the Spanish market, in addition to the invoices for the subscription to Spanish magazines and newspapers.

Regarding the appeal filed before the Supreme Court, the latter reaffirms the meaning of the judgment under appeal, especially taking into account the obvious facts, for which the relevant thing is that in the Spanish territory an activity gambling is carried out and the services rendered to Gibraltarian entities would serve to disseminate this activity that takes place in Spain. Likewise, it brings up the judgment of the ECJ and the blunt statement of this Court by which in terms of advertising benefits the country in which the actual use and exploitation is carried out is considered the one from which the advertising messages are broadcasted. The present case and services involved is similar to the one of the Athesia Druck judgment.

In relation to the argument of the recurring party, based on the global activity of the online gaming company, this part is confused in understanding that the position of pay attention to the place from which the services are provided is contrary to the vocation of global dissemination, as evidenced by claiming a partial application of the rule according to a distribution criterion based on the proportion of annual income obtained from players resident in Spain. In addition, without prejudice to the fact that the services provided in Spain make it possible to reinforce the international brand, the factual reality is that the services provided are limited to the Spanish market and in accordance with the promotion and impact criteria in that single market.

Finally, regarding the possibility of following a partial application, the Supreme Court is blunt in stating that, on the one hand, this possibility is not contemplated in the European VAT Directive, on the other hand, there is no basis for said partial application based on the facts presented and, finally, the proposed criterion does not have a normative justification that allows to attend exclusively to the income.

It is important to point out the relevance of this judgment in order to review the possible treatment given to services that may be affected by the use and enjoyment rule, although it is also necessary to highlight, as explained by the Court itself, the importance of the facts and evidence that justify the resolution, since each case must be treated independently.

Click here if you want more information about our VAT services or you can contact us at


Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Not readable? Change text. captcha txt
Logotipo de Diligens Tax ConsultingLogotipo de Diligens Tax Consulting