Country-specific updates: Spain

Binding ruling on the VAT treatment of NFTs (non-fungible tokens) transferred via an internet auction: The Spanish General Directorate of Taxes has published a binding ruling (V0486-22) on 10 March 2022, analysing the VAT treatment of the transfer via internet auction of NFTs that grant their purchasers certain rights of use, but not the ownership of the underlying digital art.

According to the ruling, the sale of NFTs, understood as digital certificates of authenticity, is deemed as electronically supplied services since they are delivered with little or no human intervention and with the help of technology. The place of supply of these services is where the customer is located. If the customer is a final consumer located in another EU Member State, the place of supply is the State where the customer is located once the EUR10,000 threshold is exceeded in a given year, and it would be possible to use the One-Stop Shop scheme to file and pay VAT. In any case, the service provider is responsible of determining where the customers are located in order to apply the relevant VAT rates.

Moreover, the Tax Authorities focus on the fact that these services may be subject to the use and enjoyment rule where recipients of NFTs are resident in third countries. In this regard, the Tax Authorities conclude that the use and enjoyment rule would apply if the service is used in Spain by the direct recipient resident in a third country and, also, if the service is used in Spain by another person resident in a third country (in both cases, regardless if the recipient of NFTs carries out VAT-able activities in Spain).

DLA Piper comment: This ruling will be noted by other tax authorities as the trading of NFTs is becoming more prevalent.