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.


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

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