Spain reduces the scope of the use and enjoyment rule

28 February 2023

In January 2023, Spain amended its VAT law relating to "use and enjoyment rules" applied to professional services in the country.

“Use and enjoyment rules” can be used by all EU member states to ensure that certain services are taxed for VAT purposes where the service being provided is used and enjoyed when supplied to non-EU customers. Typically, these rules apply to the supply of services to consumers (B2C), and include hire of goods, transport, telecommunication and professional services.

Until January 2023, Spain was the only EU country that applied these rules to business-to-business (B2B) professional services. These professional services included the supplies of copyrights, patents, licenses, trademarks, advertising, and services provided by consultants and lawyers. 

Due to lack of reciprocity agreements with most non-EU countries, it meant most non-resident businesses receiving these supplies could not reclaim the VAT amounts they were charged.  

The change to the VAT law relating to “use and enjoyment rules” means that all non-resident businesses purchasing professional services from Spanish companies will no longer be charged VAT.