Country-specific updates: Spain

The Spanish General Directorate of Taxes has recently issued a binding ruling (V0933/2021) explaining the accrual of VAT where the parties enter into an escrow agreement. In that case, the parties entered into a forward sale under which an entity undertakes to construct and deliver an office building. In order to secure the future sale and purchase, the parties entered into an escrow agreement. The General Directorate of Taxes state that if the entity cannot dispose of the funds deposited in the escrow account until the contractually agreed conditions are fulfilled, in general at the end of the contract, it is deduced that the deposit of the same in an escrow account in the name of the entity does not imply the realization of an advance payment. Therefore, in these circumstances, the deposit of the funds in the escrow account does not itself trigger a taxable supply.