The Spanish High Court (Tribunal Supremo) recently issued a judgment (Judgement STS 4073/2019) related to the application of the so-called use and enjoyment rule (article 59a b) of VAT Directive 2006/112).
This rule subjects to Spanish VAT certain services (mainly those intangible) where the recipient is established in a third non-EU country and the recipient directly uses the services to carry out operations subject to VAT in Spain. The partial application of this rule has been admitted by the Spanish tax authorities and the courts in cases where the recipient uses the services not only for its taxable activities in Spain but also in other countries using a proportional income calculation.
The High Court’s judgment challenges such partial applications.
Source: BDO
