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January 17, 2023

Spain limits scope of use and enjoyment VAT rule from 2023

  • From 1 January 2023, the Spanish value-added tax (VAT) law for the “use and enjoyment rule” that applied to certain services supplied to customers established outside the European Union (EU) has been amended, restricting the application of this rule.

  • The new provision means that most services supplied by Spanish businesses to non-EU customers will no longer be subject to Spanish VAT.


Article 58 of the EU VAT Directive allows Member States to consider the place of supply for VAT purposes for certain services, that would be situated outside the EU, as being situated within the territory of the Member State when their effective use and enjoyment takes place within the territory of that Member State.

Spain has been using this provision extensively, including applying it to all business-to-business (B2B) professional services such as the supply of copyrights, patents, licenses, trademarks, advertising services and services rendered by consultants and lawyers, as well as to all B2B financial and insurance services.

Moreover, from 2021, the Spanish Tax Authority explicitly included under the scope of this rule all B2B services (including legal and tax advisory services) when the effective use or enjoyment of those services took place in the Spanish territory based on an objective perspective, not taking into account whether the recipient of the service used it as an input connected to transactions carried out in Spain subject to VAT, or the user of the service was the recipient from a contractual point of view (e.g., the first recipient) or any other party in the supply chain. Therefore, in practice, since 2021 the Spanish Tax Authority materially expanded the scope of application of the use and enjoyment rule.

Due to the VAT refund rules for non-established businesses, the VAT charged on these services was potentially recoverable by non-EU recipients located in just a few specific jurisdictions (i.e., Canada, Israel, Japan, Monaco, Norway, Switzerland, and the United Kingdom).

New scope of the use and enjoyment rule as from 1 January 2023 under the new legislation already in force

From 1 January 2023, the use and enjoyment rule will be exclusively applicable to the following:

  • B2B financial and insurance services

  • B2B or business-to-consumer (B2C) hiring of means of transport

  • B2C professional services

B2B professional services rendered by consultants and lawyers will fall outside of the provision, and therefore will not be charged with Spanish VAT when the recipient is established outside of Spain.

Chargeable event rules to be considered

As the new legislative prevision entered into force as of 1 January 2023, it will affect services rendered from that date.

Services that were provided before that date will be subject to the former provision, even if they are invoiced in 2023.

In the case of continuous supply of services, the former provision will be applied when the expiry of the period to which such statements of account or payments are related corresponds to a date before 2023.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Abogados, Madrid


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