A recent decision of the General Tax Authority (DGT CV 25-9-18) makes clear that if a business or professional provides services to a non-profit organisation that is established in another Member Country where it is not identified for tax purposes due not being required to do so, these services provided by the taxable subject may be invoiced with or without the tax, taking into consideration the Place Provided rules of VAT applicable in the territory where the tax is payable.
The DGT addresses this situation and states that:
1. The services are deemed rendered in the VAT territory (Spain) when the customer is a business or professional having in this territory its corporate headquarters, a permanent establishment or habitual domicile, and the services supplied are used therein. Otherwise, the services are located in the headquarters of the supplier (Value Added Tax Law art. 69).
2. It is important to determine the status of the customer of the service. To this end, the customer will be regarded as a taxable person in when:
- the customer has communicated its individual VAT identification number to the supplier, and the supplier verifies the validity thereof (VIES); or
- the customer has requested but not yet received an individual VAT identification number, and other means exist to prove it is a taxable subject or, though non-taxable, is required to be identified for VAT purposes. The information provided in this case must be verified by normal commercial security measures (Council Implementing Regulation (EU) No. 282/2011 art. 18).
Based on the foregoing, the Administration understands that the lack of identification of the taxable person means that the services are located in the territory where the Spanish VAT is due (Value Added Tax Law art. 69. One. 2) and are, therefore, subject to and not exempt from the Spanish tax, and the taxpayer must be charged in the invoices issued by the non-resident (a non-profit organisation).
Bettina Náray
