Country-specific updates: Spain

Application of Titanium Ltd v Finanzamt Österreich C-931/19 to Spain

The EU Court of Justice has ruled in judgment Titanium Ltd v Finanzamt Österreich C-931/19 on 3 June 2021 that the leasing of a real estate property in a EU Member State without having human resources does not qualify as a fixed establishment for VAT Purposes. In this regard, having local people responsible for certain management tasks, contractually appointed by the lessor, without being able to make the important decisions concerning the letting of the property, does not qualify as having human resources.

This judgement is relevant in Spain since Spanish Law includes the leasing of real estate property in an open list of activities giving rise to a fixed establishment, even without human resources.

Spanish VAT Law also provides (consistent with the EU place of supply rule for services relating to land) that leasing of real estate property and related services are located in Spain so, in practice, this judgement clarifies that the rent would be subject to the reverse charge mechanism if the lessor does not have the human resources to operate the leasing business in Spain.