Spain: VAT treatment of intra-group services; possible implications of CJEU judgment

Spain: VAT treatment of intra-group services

A recent judgment of the Court of Justice of the European Union (CJEU) concerning the value added tax (VAT) treatment of intra-group services may have implications under the Spanish VAT group rules.

1000

Related content

The CJEU held that services provided by a Danish head office to its fixed establishment in Sweden were subject to Swedish VAT because the Danish head office was part of a VAT group in Denmark. Read TaxNewsFlash

As previously observed, the CJEU judgment could have major implications for the VAT treatment of intra-group services—in particular if there is a limited VAT recovery right.

What are the possible implications of the CJEU judgment for Spanish VAT grouping rules?

It is unclear whether the CJEU judgment would apply in cases when the head office belongs to a Spanish VAT group, given the peculiarities of the Spanish VAT grouping regime. The position of the Spanish tax authorities has been one for consistency between the Spanish VAT group rules and the single taxpayer VAT group regime (under the VAT Directive).

In any event, further clarification of the VAT treatment of intra-group services would be warranted, given the current interpretation by the tax authorities and the indicators used by them to challenge the dependency of branches with regard to the head office.

Accordingly, there are action steps for permanent (fixed) establishments in Spain to consider with regard to the VAT treatment of internal transactions among establishments of the same legal entity.

Read a March 2021 report [PDF 188 KB] prepared by the KPMG member firm in Spain

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal