Modification of the scenarios in which the “use and enjoyment rule” applies. Art 70.Two Spanish VAT Law


The “use and enjoyment rule” is regulated in section Two of article 70 of the Spanish VAT Law and consists of a location rule for certain cross-border services listed below when, in accordance with the applicable rules for the location of services, these are not understood to be rendered in the European Community, the Canary Islands, Ceuta or Melilla, but their effective use or exploitation is carried out in the Spanish VAT Territory.

Since January 1, 2023, with the entry into force of Law 31/2022, of December 23 and, specifically, due to its article 73, the services affected by this “use and enjoyment rule” of location of cross-border services in VAT, have changed, now these being the following:

  1. Those included in section Two of article 69 of the Spanish VAT law and those for the lease of means of transport, whose recipient is not considered a company or an entrepreneur. Among these services included in article 69.Two, would be, among others, advertising, tax, legal or accounting advice, leasing of tangible moveable goods and, in general, those services considered “intangible”.
  1. Insurance, financial and transportation leasing services, whose recipient is a company or an entrepreneur.

Regarding the first point, except for the case of the rental of means of transport, which was already contemplated previously, the use and enjoyment rule would apply to services provided to private individuals (B2C), while in the previous wording it applied to the same services, but only when they were provided between companies or entrepreneurs (B2B).

Regarding the second point, for financial and insurance services, there would have been no changes compared to the previous regulation in the use and enjoyment rule, so the providers must continue to take this rule into account to locate the cross-border service, before determining whether the provision of this service could entitle the provider to deduct the VAT when it is understood to be rendered outside the EU.

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